The gold price stepped back from Tuesday’s three-week high in Wednesday morning trading but further upside is possible ahead of US GDP figures and the FOMC statement. The spot gold price of $1,207.80/1,208.50 per ounce was down $3.40 on Tuesday’s close and below that session’s peak of $1,215.00. It has traded in a narrow $5 intraday range so far. “The investment climate appears to be stacking up more positively for gold. The dollar has been on the defensive to the euro since mid-April and expectations for a Fed rate hike, which presumably have been factored into the market, has been put off until later in the year,� HSBC’s James Steel said. “While we may see some pullback in gold after a sharp 2-day run up after the FOMC statement, we detect moderately greater confidence in the bullion market,� he added. Observers will scrutinise the FOMC statement due at the conclusion of its two-day meeting for clues as to when a US may choose to begin normalising monetary policy. Slack in the labour market and stagnant inflation figures have previously steadied the Fed’s hand on raising rates and the predicted slowdown in GDP growth may well add to that. But analysts believe that the deflationary environment is easing, which may well prompt some comments from Fed chair Janet Yellen. “Market participants are certainly expecting a dovish tone in the statement in light of the further weakness in economic indicators since the FOMC’s last meeting,� MKS’ Alex Thorndike said in a note. “With the rates market pricing the first full rate hike out of December and the USD Index testing its lowest level since early March, the market are probably well prepared for dovish overtones from the statement.� The greenback is now at its lowest in three weeks against the euro at 1.10 and at a two-month low against the basket of currencies at 95.89. The market is also focused on the US quarterly GDP growth figure. While the expected drop to 1.0 percent from 2.2 percent in the last GDP reading is largely priced in, anything below consensus may provide further upward impetus for gold as the dollar continues its retreat. In other data, eurozone private loans at 0.1 percent were as expected but this was the first positive reading since 2012. M3 money supply at 4.6 percent bettered the consensus 4.3 percent. The German preliminary CPI and pending home sales are still to come. Other metals were similar – silver at $16.49/16.54 per ounce was down six cents and below the three-week high hit in the previous session at $16.70. Platinum was last up $1.50 at $1,152/1,157 per ounce while palladium was unchanged at $771/776. In PGMs news, first-quarter PGMs production at Aquarius Platinum, the world’s fifth-largest platinum producer, climbed six percent to 84,792 ounces.

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