Gold prices were little changed on Wednesday in Asia while the U.S. dollar was also flat. The Federal Open Market Committee is scheduled to release the minutes from its last rate-setting meeting later in the day.
In futures trading, gold’s benchmark April contract on the Comex division of the New York Mercantile Exchange last traded at $1,345.55 per ounce by 12:41 AM ET (05:41 GMT), up 0.05%.
TheU.S. doller index was trading at 96.463, up 0.04%.
Traders will be closing monitoring if the Fed provides any hints on future rate hike paths later in the day when it releases the minutes from its last meeting.
“First, (the Fed) effectively ruled out any rate increases this year,” Investing.com’s Darrell Delamaide said. “Now the message coming across is that the Fed won’t be shrinking its balance sheet much more than it has already and will keep it at fairly elevated levels.”
“It may even keep quantitative easing — purchasing bonds with money created out of thin air — as a new tool for monetary policy rather than just an emergency measure.”
On Tuesday, gold prices received some support after Cleveland Fed president Loretta Mester, normally considered to be one of the Fed hawks, stated that she would favor slowing down the balance sheet normalization process.
The Fed kept rates on hold last month and surprised markets by shifting to a more dovish stance on future rate hikes, citing subdued inflation and rising risks to global economic growth.
The dovish shift in tone to the Fed’s message implies a longer pause in rate hikes, which in turn decreases the opportunity cost of holding non-interest bearing gold.
Meanwhile, sino-U.S. trade talks are also expected to be in focus in the coming days. The White House said on the weekend that talks between high-level officials will begin in Washington later this week.