Gold prices inched up on Wednesday, but remained near four-week lows hit in the previous session as expectations for a US rate hike in March gathered momentum. Federal Reserve Chair Janet Yellen last week said the central bank was poised to lift benchmark US rates provided jobs and inflation data held up, comments seen as cementing plans for an increase at the Fed's March 14-15 meeting. Investors are now awaiting non-farm payrolls data for February on Friday as a key barometer of the US economy.
"Gold has made a modest recovery this morning as early Asian buyers are sighted. Whether they are picking up gold at a bargain rate or are catching a falling knife remains to be seen," said Jeffrey Halley, senior market analyst at OANDA. Spot gold had edged up 0.1 percent to $1,217.2 per ounce at 0643 GMT. It marked its lowest since February 3 at $1,213.6 an ounce in the previous session.
Bullion is highly-sensitive to rising US interest rates, as these increase the opportunity cost of holding the non-yielding metal, while boosting the dollar in which it is priced. "Gold will likely trade in a narrow band, between the $1,210 and $1,220 levels leading up to the non-farm payroll data and will exhibit a declining trend going into the Fed meeting," said Jiang Shu, chief analyst at Shandong Gold Group.