Gold prices in domestic and international markets edged lower on Wednesday as traders assessed chances of the US Federal Reserve raising interest rates just once more in May before pausing. Markets are pricing an 86 per cent chance the Fed raises rates by 25 basis points at the May meeting, and are winding back expectations of cuts later in the year – moves that have put the brakes on US dollar selling.

Gold futures on Multi Commodity Exchange (MCX) for June 2023 expiry were trading at ₹60,140 per 10 gm, down ₹0.58 per cent in trade today. Meanwhile, silver futures were trading at ₹74,525, down or 0.96 per cent.

"MCX Gold is likely to move between 59900 and 61000. The 20-day EMA would act as key support to the trend. Meanwhile, the negative divergence between price and oscillator RSI could limit it to go beyond 61000. Only a close below 59900 would weaken the trend towards 59300," brokerage ICICI Direct said.

"MCX Silver is likely to trade in range of 74400-76200. The trend would turn bearish only with a close below 74400 towards 73700," the brokerage added.

On international market

Spot gold was down 0.1 per cent at $2,003.03 per ounce, as of 0337 GMT. US gold futures fell 0.2 per cent to $2,016.20.

The dollar index was up 0.1 per cent, making gold expensive for buyers holding other currencies.

"Expectations are already priced for a 25 basis points hike, leaving much of the focus to be on whether a rate pause will be signalled thereafter," said Yeap Jun Rong, a market analyst at IG.

“While that may provide an anchor for gold prices, given the recent rally and overextended technical conditions, the possibility of some unwinding (in prices) upon validation of the Fed's rate outlook may still remain on the table."

Gold is considered a hedge against inflation, but higher interest rates dim the non-yielding asset's appeal.

The Fed should continue raising interest rates on the back of recent data showing inflation remains persistent while the broader economy seems poised to continue growing, even if slowly, St. Louis Fed President James Bullard said on Tuesday.

But Atlanta Fed President Raphael Bostic said one more hike from the U.S. central bank "should be enough" before taking a step back to "see how our policy is flowing through the economy."

Investors are now trying to gauge whether the rate hike in May will be the last before the Fed pauses, and are focussing on more comments from Fed officials this week before they enter a blackout period from 22 April ahead of the May meeting.

In other precious metals, spot silver fell 0.2 per cent to $25.16 per ounce, platinum dipped 0.6 to $1,075.58 and palladium gained 1 per cent to $1,624.72.