Gold flat ahead of Fed meeting
Traders cautious as they await news from central banks
Bengaluru — Gold prices were flat on Tuesday, as cautious market participants awaited fresh cues from top central banks on their monetary policy plans, especially from the US Federal Reserve.
Spot gold was unchanged at $1,982.69 an ounce by 2.48am GMT. US gold futures fell 0.1% to $1,991.00. The Fed, which meets on Tuesday and Wednesday, is widely expected to raise interest rates by 25 basis points.
Gold prices could move towards $2,000 if the Fed highlights recession worries and hints at a pause in the rate hike cycle, said Ajay Kedia, director at Kedia Commodities in Mumbai.
US manufacturing contracted in April but there was a build-up of inflation pressures, supporting expectations of Fed rate hike, according to data released on Monday.
The European Central Bank (ECB) is likely to increase rates for the seventh straight meeting on Thursday.
Bullion is known as a hedge against inflation and economic uncertainties, but rising rates tend to diminish demand for the zero-yielding asset. In the previous session, gold prices briefly rose above $2,000 after JPMorgan’s acquisition of First Republic Bank’s assets.
Regulators seized First Republic Bank and sold its assets to JPMorgan Chase & Co on Monday, in a deal to resolve the largest US bank failure since the 2008 financial crisis and draw a line under a lingering banking turmoil.
Spot silver fell 0.4 % at $24.87 an ounce.
“We are bullish on silver as industrial demand for it is going to be high in 2023. Prices could hit $32 this year,” Kedia said.
Platinum lost 0.2% to $1,047.94, while palladium edged 0.7% higher to $1,460.78.
Reuters