Gold prices were unchanged on Wednesday, holding above the key $1,800 level, as expectations of slower U.S. rate hikes lent support, but a rise in the dollar capped any further gains in the non-yielding bullion.
Spot gold was steady at $1,817.95 per ounce after rising more than 1% on Tuesday on the back of a dip in the dollar. U.S. gold futures remained unchanged from the previous session at $1,825.40.
"We believe the trend continues to move sideways to higher, with the market focused on the idea that the Fed is coming to an end with its interest rate hikes in early 2023," said David Meger, director of metals trading at High Ridge Futures.
Gold has risen nearly $200 since falling to a more than two-year low in late September as expectations around slower rate hikes from the Federal Reserve dented the dollar's allure.
The Fed lowered its pace of rate hikes gradually to 50 bps in December after four consecutive 75 bps rate hikes. Fed funds futures traders are pricing for rates to peak at around 4.85% in May, before declining to 4.37% by the end of the year.
Gold is sensitive to higher interest rates as they increase the opportunity cost of holding gold since the metal does not pay interest.
However, while "there will be days where some ancillary factors will nip at the heels of the gold market, we believe the sideways-to-higher trend remains intact," Meger highlighted.
The dollar index was slightly higher on the day, making gold expensive for oversees buyers.
Markets are also focused on reports of a surge in COVID-19 cases in top consumer China.
Spot silver fell 0.4% to $24.08 per ounce, platinum was down 0.8% to $999.11, while palladium dipped 3.1% to $1,678.84.