Gold clings to gains

Gold retained small overnight gains on Wednesday, but caution prevailed ahead of a Federal Reserve policy statement later in the session as investors waited for clues on the timing of a US rate hike.

Spot gold was little changed at $1,167.05 an ounce by 0308 GMT. The metal had risen 0.3 percent in the previous session, snapping a four-day losing streak.

Many traders chose to stick to the sidelines ahead of a Fed statement at 1800 GMT following a two-day policy meeting.

Fed rate outlook

The US central bank is not expected to raise rates on Wednesday, but markets will be eyeing the statement for the Fed’s take on the US and global economies, and whether it could hike rates at its next meeting in December.

“We do not detect any real conviction that the Fed is likely to raise rates near term,’’ said HSBC analyst James Steel, warning, however, that prices could slip if gold doesn’t move higher soon.

“If gold cannot push convincingly higher soon, recent longs may become disenchanted and liquidate. Although we are price positive long term, in the near term, this could knock gold back below $1,150/oz quite rapidly,’’ he said.

COMEX gold

Hedge funds and money managers raised their bullish bets on COMEX gold for a fifth straight week in the week to October 20 to their highest since February, according to latest data from the Commodity Futures Trading Commission.

Gold has been supported in recent weeks on rising speculation that the Fed will delay its first rate hike in nearly a decade to next year due to concerns over global growth and the impact on the US economy.

The Fed had refrained from raising rates last month, citing global concerns.

Fed Chair Janet Yellen has since said the bank would still increase rates this year, though some other policymakers have said otherwise.

Bullion has been weighed down all year by uncertainty over the timing of a rate hike. Ultra-low rates boost the appeal of non-interest-paying gold.

US biz investment, consumer confidence

It was supported on Tuesday after data showed a second straight drop in a gauge of US business investment in September and a decline in consumer confidence this month, hinting at economic weakness that could prompt the Fed to delay a rate hike.

Asian stocks slipped on Wednesday, taking cues from an overnight decline on Wall Street, while the dollar index held steady as a wait-and-see mood prevailed ahead of a policy statement from the Fed.