Mubasher: Gold prices declined on Wednesday, driven by overnight gains in US equities, with most of Asian markets closed in observance of May Day, according to Reuters.

This came also as market participants anticipated the closely watched Federal Reserve decision on the course of future monetary policy trajectory.

At 7:08 am GMT, spot gold declined by 0.31% to $1,279.50 per ounce, while US gold futures fell by 0.39% to $1,280.70 per ounce.

Following a decline caused by somewhat weak figures from China, global stock markets edged up on Tuesday after US President Donald Trump agreed with Democratic leaders on $2 trillion in infrastructure spending.

In addition, appetite for riskier assets was fuelled by signs of improvement in the US-Sino relations.

The White House chief of staff Mick Mulvaney said that their trade dispute between the world’s two biggest economies will be resolved “one way or the other” over the next two weeks.

With the upturn in equities and positive economic findings, “there is no need for inflation hedges in the gold market,” CMC Markets chief strategist Michael McCarthy was quoted by Reuters.

However, the yellow metal had some support from the retreat of the US dollar from the recent peaks reached over the last few sessions.

After the Eurozone reported stronger-than-expected economic growth for the first quarter, some pessimism was brushed off the euro (EUR), pushing the single currency higher against the greenback.

Investors anticipate the conclusion of a two-day policy meeting by the Federal Open Market Committee (FOMC), in which the path of monetary policy for this year at least, will be decided. 

At 7:09 am GMT, the dollar index, which tracks the US currency against a basket of six major rivals, stabilised at 97.4780.