Commodity Updates - Gold prices rose by 0.26 per cent on Wednesday with all eyes on the upcoming Federal Reserve policy review expected to hold steady, but offer fresh commentary on the likely path for the remainder of the year.

The Fed is widely expected to leave its benchmark Federal Funds Rate at its current range between 0.25 to 0.50 per cent when it issues its latest monetary policy statement.

Any rate hikes by the FOMC this year are viewed as bearish for gold, which struggles to compete with high-yield bearing assets in rising rate environments. Read More - Commodity Updates

Gold futures for April 2016 contract, at MCX, were trading at Rs. 29,112 per 10 grams, up by 0.26 per cent after opening at Rs. 29,051 against the previous closing price of Rs. 29,037. It touched the intra-day high of Rs. 29,130 till the trading.

However, a stronger dollar reduced the appeal of gold as an alternative asset. Stronger greenback makes the bullion expensive for those holding other currencies, thus reducing demand.

After a sharp rise in January, gold imports in February declined 29.49 per cent to USD 1.39 billion, which is expected to keep a lid on the country's current account deficit (CAD). The sliding prices of the yellow metal in both global and domestic markets are seen as a contributory factor for the plunge. Gold imports stood at USD 1.98 billion in February 2015. The contraction in imports helped narrow trade deficit at USD 6.54 billion last month as against USD 6.74 billion in the year-ago period. India is the largest importer of gold in the world and the imports mainly cater to the demand of the jewellery industry. In July-September of the current fiscal, CAD rose to USD 8.2 billion, or 1.6 per cent of GDP, from 1.2 per cent, or USD 6.1 billion in the April-June quarter.

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