Gold prices rose marginally on Wednesday, as investors awaited minutes of the U.S. Federal Reserve’s latest policy meeting to assess prospects of further interest rate hikes.

Spot gold was up 0.1% at $1,835.40 per ounce, as of 0334 GMT. U.S. gold futures
GCv1 firmed 0.1% to $1,845.10.

Bullion is seen as a hedge against inflation, but rising interest rates dull the non-yielding asset’s appeal.

“Gold is leaning on the ropes, but it’s not doing too bad considering how high U.S. yields have moved – following a slew of strong economic data, which points to a higher terminal Fed rate,” said Matt Simpson, a senior market analyst at City Index.

Data on Tuesday showed U.S. business activity unexpectedly rebounded in February to its highest level in eight months — the latest in a stream of data that have shown signs of a resilient U.S. economy and a tight labor market.

“Traders will be more sensitive to hawkish clues in the FOMC (Federal Open Market Committee) minutes, which could weigh on gold prices,” said City Index’s Simpson.

“There’s a greater chance of gold testing $1,800 before it tests $1,900 over the foreseeable future,” given the prospects of markets repricing a higher terminal Fed rate, Simpson added.

Minutes of the Fed’s latest meeting are due at 1900 GMT on Wednesday. The U.S. central bank raised rates by 25 basis points at its Jan. 31-Feb. 1 meeting.

The Fed is expected to raise benchmark rates above 5% by May with a peak seen at 5.352% in July.

The dollar index
eased 0.1%, making greenback-priced bullion less expensive for buyers holding other currencies. Benchmark U.S. 10-year Treasury yields
hit their highest since November.

Spot silver was down 0.1% at $21.80 per ounce and platinum fell 0.3% to $940.03. Both metals were off one-week highs hit on Tuesday.

Palladium shed 1.3% to $1,505.95.