Gold futures on the COMEX division of the New York Mercantile Exchange rose on Wednesday ahead of the announcement of the U.S. central bank's Federal Open Market Committee (FOMC) meeting.
The most active gold contract for June delivery rose 7 U.S. dollars, or 0.56 percent, to settle at 1,250.40 dollars per ounce. Traders are hedging their bets as the April FOMC meeting will reach its conclusion after the market's close on Wednesday, resulting in upward pressure for the precious metal.
Ever since March's FOMC meeting, traders believe that the Fed may raise rates from 0.50 to 0.75 during the July FOMC meeting. According to the CMEGroup's Fedwatch tool, the current implied probability of a hike from 0.50 to 0.75 is at 14 percent at the June 2016 meeting, and 27 percent at the July 2016 meeting.
Gold was given additional support as the international trade in goods report released on Wednesday by the U.S. Department of Commerce showed activity slowing during the month of March. Activity fell by 9.5 percent to 56.9 billion U.S. dollars, compared to 62.9 billion U.S. dollars during the month of February.
Analysts note that exports fell 1.7 percent to 116.7 billion U.S. dollars as consumer goods, industrial supplies, autos, and foods all reported worse-than-expected results. The U.S. Dollar Index also gave support to the precious metal as it fell by 0.09 percent to 94.42 as of 16:05 GMT.
The index is a measure of the dollar against a basket of major currencies. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors.
Silver for May delivery added 17.9 cents, or 1.05 percent, to close at 17.289 dollars per ounce. Platinum for July delivery rose 5.3 dollars, or 0.52 percent, to close at 1,025.40 dollars per ounce.
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