👀 Ones to watch: The MOST undervalued stocks to buy right nowSee Undervalued Stocks

Gold prices muted ahead of Fed meeting as safe haven appeal wanes

Published 03/22/2023, 10:14 AM
© Reuters.
XAU/USD
-
XAG/USD
-
GC
-
HG
-
SI
-
PL
-

By Ambar Warrick

Investing.com -- Gold prices moved in a tight range on Wednesday, stabilizing after a sharp drop in the prior session as markets hunkered down ahead of a Federal Reserve interest rate decision, while easing fears of a banking crisis spelled lesser safe haven demand for the yellow metal.

Bullion prices were nursing sharp losses from the prior session, as government intervention helped calm fears over a looming crisis in the U.S. and European banking system. This in turn saw markets dump gold at one-year highs, given that the yellow metal’s recent rally was largely driven by safe haven demand.

Easing fears of a bank crisis also saw markets begin pricing in a greater possibility that the Fed will remain unwavering in its fight against inflation. The prospect of rising interest rates bodes poorly for zero-yield assets like gold.

Spot gold was flat at $1,940.80 an ounce, while gold futures rose 0.4% to $1,944.10 an ounce by 22:09 ET (02:09 GMT). Both instruments sank nearly 2% each on Tuesday, pulling back sharply from a one-year high.

The losses also saw gold fall from the coveted $2,000 an ounce level, which analysts say will take many more positive cues to reach.

Focus is now on the results of the Federal Reserve’s two-day meeting later in the day, with the central bank widely expected to hike rates by 25 basis points, as it moves to curb hotter-than-usual inflation.

But the Fed’s outlook on monetary policy will be closely watched amid growing pressure on the economy. The recent collapse of three regional U.S. banks was largely due to their vulnerability to rising interest rates, which could be shared by other medium to small-sized lenders in the country.

Fears of the banking crisis fueled a stellar rally in gold and precious metal prices over the past week.

Other precious metals edged higher on Wednesday, but were nursing steep losses from the prior session. Platinum futures rose 0.4%, while silver futures added 0.6%.

Among industrial metals, copper prices retreated after logging four straight sessions of strong gains. Easing fears of a banking crisis were the biggest drivers of the red metal, which had tumbled to two-month lows on concerns over slowing demand.

Copper futures fell 0.3% to $3.9928 a pound, but were up nearly 4% in the past four sessions.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.