By: Economy Middle East

Gold prices declined on Wednesday as investors awaited the U.S. Federal Reserve’s policy decision and comments from Fed Chair Kevin Warsh for further signals on inflation trends and the outlook for interest rates.

As of 4:31 GMT, spot gold was down 0.08 percent at $4,025.27 per ounce, while U.S. gold futures for August delivery slipped 0.38 percent to $4,023.50.

In the UAE, gold rates edged AED0.25 higher, with 24-carat gold reaching AED485.25 and 22-carat gold rising to AED449.25.

In addition, 21-carat gold increased to AED430.75 and 18-carat gold ticked up to AED369.25.

Meanwhile, 14-carat gold rose to AED288.

Investors await Fed rate decision and Chair’s comments

Gold remains closely tied to the outcome of Wednesday’s FOMC meeting, with investors watching for signals on the Federal Reserve’s future policy path. A shift toward a less hawkish tone from the Fed could potentially reverse the recent bearish momentum in gold prices.

The Fed’s policy decision is scheduled for 18:00 GMT, followed by comments from Fed Chair Kevin Warsh at 18:30 GMT.

Market expectations point to a 70 percent probability that the central bank will leave rates unchanged, while traders see a 30 percent chance of a 25-basis-point hike, according to the FedWatch tool.

Markets are also pricing in a 76 percent likelihood of a rate increase in September.

Meanwhile, the Bank of England and the Bank of Japan are broadly expected to keep interest rates unchanged at their upcoming meetings on Thursday and Friday, while maintaining a cautious stance amid persistent inflation concerns.

Gold is traditionally viewed as a hedge against inflation, but higher interest rates tend to weigh on demand for the non-yielding asset by increasing the opportunity cost of holding the metal.

Gold prices to reach $4,500 by year-end

In the Middle East, the U.S. military said on Tuesday that it had intercepted multiple ballistic missiles launched by Iran toward U.S. forces in the region, describing the incident as an attempted surprise attack by Tehran.

Iran’s Revolutionary Guards later said they had fired several ballistic missiles at a U.S. air base and a U.S. Central Command facility in Jordan. As a result, oil prices edged higher, supported by a decline in U.S. crude inventories.

Commerzbank lowered its year-end gold price forecast to $4,500 per troy ounce, while projecting silver prices could rise to $67 per ounce by the end of the year.

Other precious metals

As gold prices declined, the precious metals market posted mixed movement. Spot silver climbed 0.9 percent to $57.65 an ounce, while platinum gained 0.3 percent to $1,600.40. Palladium, however, fell 0.7 percent to $1,261 an ounce.