Gold prices pared earlier gains to trade flat around $4,315 per ounce on Wednesday, pausing a four-session rally after the Federal Reserve left interest rates unchanged, as widely expected, and signaled the possibility of a rate hike later this year. In its projections, half of FOMC participants indicated that another increase could be warranted, reflecting expectations that core inflation may run hotter than previously anticipated due to the ongoing conflict in the Middle East.
The Fed also reiterated that it has scope to prioritize price stability, underpinned by recent labor market data. Precious metals retreated as shorter-term Treasury yields climbed, increasing the opportunity cost of holding non-yielding bullion relative to interest-bearing assets.
At the same time, safe-haven demand eased as both the United States and Iran reaffirmed their intention to finalize an agreement on Friday to suspend hostilities and resume energy trade. Elsewhere, major European central banks kept policy rates on hold, while the Bank of Japan raised rates in line with expectations.