Gold prices are holding steady in early trading on Wednesday as traders await to hear the Fed’s latest comments after the March monetary policy decision before making their next move, even as the US dollar also holds strong for now. At the time of writing, GOLD is trading at a little above $1,735.

Even though the Fed is widely expected to keep its monetary policy and interest rates unchanged, there is considerable interest to know if the central bank will respond to the recent volatility in bond markets and concerns about increasing inflation. If the Fed continues to sound dovish at today’s meeting, as is anticipated, it could support bullish moves in gold later today.

Gold prices are also enjoying support from concerns of Germany, France and Italy suspending the use of the AstraZeneca COVID-19 vaccine over possible blood clot issues. This decision is likely to further delay any possible recovery in the Eurozone economy, which already lags behind the US for now.

However, gold is facing some pressure from a strength in US bond yields and the dollar ahead of the Fed’s announcement. Stronger bond yields increase the opportunity cost of holding non-yielding bullion while also pushing the currency higher, which shares a negative correlation with the precious metal and keeps its price under pressure.