Gold rises as Bitcoin trades sideways ahead of Fed rate decision

Gold gained as the dollar weakened and oil prices retreated Wednesday, while Bitcoin hovered around $76,000 ahead of the Federal Reserve’s rate decision.

Spot gold rose 1.2% to $4,346 per ounce at press time, recovering from a more than one-month low reached on Monday. The retreat in oil prices followed a two-day rally, while the softer dollar reduced the cost of dollar-priced metals for overseas buyers.

Most digital assets traded lower after the CLARITY Act, a landmark crypto market structure bill, failed to win enough votes to advance on Tuesday. Bitcoin dropped below $75,000 early Wednesday before recovering to about $76,000, per TradingView.

Dean Chen, a market analyst at Bitunix, said markets are looking beyond the Fed’s expected rate decision, with the policy outlook and long-term Treasury yields becoming more important factors in asset pricing.

“With the 10-year Treasury yield breaking above 5%, markets are no longer pricing simply the near-term policy rate; they are reassessing the outlook for inflation, fiscal conditions and capital demand over the next several years,” the analyst said in a note.

Chen said the key market signal will be whether long-term Treasury yields stabilize following the Fed’s decision. Continued elevated yields could indicate that investors are independently pricing longer-term inflation and fiscal risks, while lower or more stable yields could suggest greater confidence that monetary policy is sufficient to anchor inflation expectations.

The US central bank was scheduled to announce its decision at 2:00 pm, with Fed Chair Kevin Warsh due to hold a press conference afterwards.

Market pricing showed a 93% probability of at least a 25-basis-point rate hike, based on the CME FedWatch Tool. While gold is commonly used as a hedge against inflation, higher interest rates can make the non-yielding asset less attractive relative to interest-bearing investments.

Energy markets are adding another source of uncertainty, Chen noted. He pointed to pressure on Saudi energy transportation routes and Russia-Ukraine-related disruptions to diesel supplies and refining capacity, arguing that supply constraints could make inflation more persistent and limit the effectiveness of demand-focused monetary policy.