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Gold off one-year high hit on Monday
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Uncertain macro backdrop continues to entice gold buying -
ANZ
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Fed statement due at 1800 GMT on Wednesday
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U.S. dollar up 0.2%
(Updates prices)
By Kavya Guduru
March 21 (Reuters) - Gold prices edged lower on Tuesday,
ahead of the Federal Reserve policy meeting as expectations grew
that the U.S. central bank would slow its monetary policy
tightening given the upheaval in the banking sector.
Spot gold was down 0.2% at $1,975.71 per ounce,
as of 0722 GMT. U.S. gold futures eased 0.1% to
$1,980.10.
According to the CME FedWatch tool, markets are pricing in a
25.5% chance that the Fed will stand pat at the end of its March
21-22 meeting, with a 74.5% chance of a 25-basis-point (bps)
hike.
"A pause (in rate hikes) could send gold back above $2,000
initially, but for it to hold onto those gains, we'd need to see
a lower dot plot and dovish press conference ... they're more
likely to hike by 25 bps and peddle a 'data dependent' angle,"
said Matt Simpson, a senior market analyst at City Index.
Gold is considered a safe haven during times of financial uncertainty, and lower interest rates make non-yielding bullion more attractive by reducing the opportunity cost of holding it. In volatile trading on Monday, gold prices initially fell by 1%, but reversed course to jump to their highest since March 2022 at $2,009.59, as investors digested the impact of measures taken by several central banks to contain a banking crisis and stabilise global financial markets. UBS agreed to buy rival Credit Suisse on Sunday for $3.23 billion in a shotgun merger engineered by Swiss authorities, which stemmed selling in bank shares though the mood was fragile. "Despite banking regulators rushing to shore up market confidence, the uncertain macro backdrop continues to entice buying (in gold)," analysts at ANZ said in a note.
The dollar rose 0.2%, making bullion expensive for overseas buyers. Spot silver fell 0.3% to $22.45 per ounce, platinum lost 0.5% at $983.20 and palladium was 0.2% lower at $1,411.15.
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(Reporting by Kavya Guduru in Bengaluru; Editing by Sherry
Jacob-Phillips and Subhranshu Sahu)
