BENGALURU (March 15): Gold prices edged up on Wednesday on safe-haven buying due to uncertainty over the outcome of Dutch elections, while markets waited for clues on the pace of U.S. interest rate hikes this year.
With an immediate rate increase by the Federal Reserve seen as a done deal, investors are focusing on what message the central bank will deliver when it concludes a two-day meeting on Wednesday. In December, the Fed forecast three rate rises this year.
Spot gold had edged up 0.4% to US$1,203.31 per ounce by 0608 GMT.
U.S. gold futures rose 0.1% to US$1,203.30 per ounce.
"We do not think much will change throughout much of Wednesday, ahead of the Fed rate decision and policy statement," said INTL FCStone analyst Edward Meir.
"Our bias is still somewhat constructive on gold, given that we think the Fed will shrink from coming across as too aggressive."
The statement from the Fed, due at 1800 GMT on Wednesday, will be followed by a briefing at 1830 GMT.
Investors were also focusing on Wednesday's Dutch elections, which have been boosting gold's safe-haven appeal.
The Party for Freedom is seen as having little chance of coming to power, but a strong election performance for the group that says it wants to "de-Islamicise" the Netherlands would fuel worries over a surprise result in French presidential elections in April and May.
"We expect the bullish bias to continue throughout the session, as the Dutch election gives the yellow metal a slight safe-haven bid," said Jeffrey Halley, senior market analyst at OANDA.
Critical support for gold held around US$1,180, analysts said.
Prices have fallen over 5% since gold failed to sustain a break above its 200-day moving average at around US$1,261 in late February.
In Britain, concerns have increased over a second Scottish independence referendum and the triggering of Article 50, which would formally begin British negotiations to leave the European Union.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.36% to 834.99 tonnes on Tuesday, from Monday. Holdings rose for a second
straight session after outflows last week.
"Positioning seems to be fairly neutral at present, so we feel that (a rate hike hike) will keep downward pressure on metals," said MKS PAMP Group trader Alex Thorndike.
Spot silver rose 0.5% to US$16.92 an ounce.
Platinum was up 0.9% at US$940.70, while palladium was firm at US$743.83. Palldium prices hit their lowest since Jan 31 at US$738.35 the session before.