Gold futures were up in early trading hours on Wednesday as market players prepared for a monetary policy statement and employment data later in the day.
On the Comex division of the New York Mercantile Exchange, gold futures were up 0.24 percent at $1.310.00 a troy ounce as of 9:40 GMT.
Gold prices settled right above year-to-date lows, as rise in US bond yields earlier this week continued to support the dollar across the board.
The US dollar index, which measures the greenback’s strength against a basket of six major competitors, was 0.12 percent higher at 91.45 by the time of this writing.
The 10-year Treasury bond yield held above a key resistance level at 3 percent. The dollar reached a four-month peak, changing its dynamic for the year from negative to positive.
Investors have opted for a moderate positioning in the first half of the week as the Federal Open Market Committee kicked off a two-day monetary policy meeting.
While no monetary changes are expected this month, market players will closely monitor for any hints on future plans for the economy. The rate decision is scheduled today at 18:00 GMT.
“The Fed is expected to reaffirm the Committee’s generally positive view of the economy and optimistic expectations for further growth and inflation in the near-term. The statement is, additionally, likely to reiterate the Committee’s intentions to continue to raise rates throughout 2018 at a ‘gradual’ pace,” Stifel Financial Corporation said in a note.
Dollar-denominated gold is sensitive to moves in US rates. A rising interest rate environment increases demand for the dollar, making gold more expensive for holders of foreign currency, while damping demand for the safe-haven asset.
On the data front, ADP nonfarm employment change for April will be out at 12:15 GMT.