Gold rises after Fed meeting

Stacked gold bars at Solar Capital Gold Zrt. in Budapest, Hungary.
Akos Stiller | Bloomberg | Getty Images

Gold prices were steady on Wednesday as expectations for more support for the U.S. economy and a dovish stance from the U.S. Federal Reserve countered pressure from optimism over COVID-19 vaccinations.

Spot gold was little changed at $1,854.18 an ounce, after touching its highest since Dec. 9 at $1,865.50. U.S. gold futures rose 0.2% to $1,858.70.

"The market has been caught between the optimism around vaccine developments and concerns around rising (COVID-19) infection rates," Standard Chartered analyst Suki Cooper said, adding that the focus was on the FOMC meeting, Brexit and the U.S. stimulus negotiations.

Leading U.S. lawmakers reported substantial progress in hammering out COVID-19 relief aid as pressure mounted amid a surge in coronavirus cases in the world's hardest hit country.

"The dollar weakness and dovish expectations for the FOMC meeting have buoyed gold prices," Cooper said.

The Federal Reserve was due to provide a playbook for its economic policy with policymakers set to conclude the final meeting of the year with investors expecting near zero interest rates and more bond-buying.

Capping bullion's gains, Moderna Inc's COVID-19 vaccine seemed set for regulatory approval this week after the U.S. Food and Drug Administration staff endorsed it as safe and effective.

"More good news on the vaccine front has the capacity to dampen gold's comeback," HSBC analyst James Steel said in a note.

Gold has risen more than 22% so far this year, banking on its appeal as a hedge against inflation likely due to the unprecedented stimulus unleashed in 2020.

Among other precious metals, silver gained 1.7% to $24.90 an ounce, and platinum fell 1.1% to $1,024.64.

Palladium rose 0.7% to $2,333.12.

"Unless the current wave of infections derails the global economy, recovering industrial production may further boost silver and the PGMs (platinum group metals)," Steel added in the note.