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62% bets of rate hike from Fed in May- CME Fedwatch
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Gold sees support near $1,950 and $1,933 - analyst
(Adds comments, updates prices)
By Seher Dareen
April 4 (Reuters) - Gold eased into a tight range on
Tuesday, after rallying in the previous session as traders
hunkered down for the U.S. Federal Reserve's next move after an
OPEC+-led surge in oil prices clouded inflation outlook.
Spot gold fell 0.2% to $1,979.69 per ounce by 1131
GMT, while U.S. gold futures were also down equally to
$1,996.40.
Bullion dropped on Monday after a surprise cut in OPEC+
crude production, but rebounded as the dollar stumbled following
the release of weak U.S. economic data. While the added inflationary worry of higher oil prices
could force major central banks to assert their aggressive
inflation-fighting stances, and markets might expect more rate
hikes, this could lead to gold "unwinding some of its recent
gains," said Han Tan, chief market analyst at Exinity.
Weighing on non-yielding gold, both U.S. and euro-zone bond
yields were higher as investor focus returned to inflation and
central bank rate hikes, with March seeing six hikes across
eight central bank meetings.
Gold is seen as a hedge against inflation, but higher
interest rates to rein in rising price pressures increase the
opportunity cost of holding it. On Tuesday, gold was wedged
between support from a weaker dollar and headwinds from higher
yields.
Markets now see a 62% chance of the Fed hiking rates by a
quarter basis point in May, with a 38% chance of a pause, while
investors see another 60 basis points of rate hikes from the
European Central Bank.
"The near-term policy path will also depend on upcoming
U.S. economic data such as payrolls. Any indication of a
slowdown in hiring activity could support the gold price again,"
UBS analyst Giovanni Staunovo said.
Silver fell 0.3% to $23.92 per ounce, platinum gained 0.8% to $993.38, while palladium was up 0.9% to
$1,473.34.
(Reporting by Seher Dareen in Bengaluru; Editing by Shailesh
Kuber and Rashmi Aich)
