July 29 : Gold edged higher on Wednesday, supported by a weaker dollar, as investors awaited the U.S. Federal Reserve's policy decision and comments from Fed Chairman Kevin Warsh for clues on the inflation and interest rate outlook.Spot gold inched 0.3 per cent higher to $4,040.63 per ounce by 0656 GMT. U.S. gold futures for August delivery were steady at $4,038.90.The dollar eased, making greenback-priced bullion more affordable for holders of other currencies. "Gold is very much connected to today's FOMC meeting.... The scenario that may see a potential reversal of the recent bearish bias in gold prices will be the Fed turning to a less hawkish rhetoric," said Kelvin Wong, a senior market analyst at OANDA.
The Fed's policy decision is due at 1800 GMT, and Warsh's comments are scheduled for 1830 GMT.Market expectations indicate a 68 per cent chance that the central bank will hold rates steady and a 32 per cent probability of a 25-basis-point hike, according to the FedWatch tool. Markets are pricing in a 77 per cent chance of an increase in September. Meanwhile, the Bank of England and the Bank of Japan are widely expected to keep rates unchanged on Thursday and Friday, respectively, and to caution against rising inflation.Gold is seen as a hedge against inflation, and higher rates increase the opportunity cost of holding the non-yielding metal.On the geopolitical front, the U.S. military said on Tuesday it intercepted multiple ballistic missiles launched by Iran towards U.S. forces in the Middle East in what Washington cast as "an attempted surprise attack" by Tehran.Iran's Revolutionary Guards later said they fired several ballistic missiles at a U.S. air base and a U.S. Central Command center in Jordan.Oil prices drifted higher, supported by shrinking U.S. crude inventories. Commerzbank on Tuesday lowered its year-end gold price forecast to $4,500 per troy ounce and said it expects silver to reach $67 per troy ounce by the end of the year.Spot silver gained 1.6 per cent to $58.08 per ounce, while platinum lost 0.4 per cent to $1,598.80 and palladium fell 0.4 per cent to $1,264.32.
