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Fed likely to raise rate by 25 bps on Wednesday
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JPM buys substantial majority of First Republic Bank's
assets
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Gold has support around upper-$1900 levels - analyst
(Adds comments, details, updates prices)
By Ashitha Shivaprasad
May 1 (Reuters) - Gold prices steadied on Monday as the
dollar gave up some gains, while cautious traders held off big
bets ahead of the Federal Reserve's interest rate hike decision
later this week.
Spot gold was little changed at $1,989.06 per ounce by 1204 GMT after hitting a session low of $1,976.89. U.S. gold futures shed 0.1% to $1,997.20. The dollar index retreated slightly, reducing some pressure on bullion. The Federal Open Market Committee (FOMC) will meet on May 2-3, and investors largely expect a 25 basis-point interest rate hike. "Spot gold has been finding support around the upper-$1,900 levels as markets are unwilling to abandon hope that Fed rate cuts are in store later this year," Han Tan, chief market analyst at Exinity, said. Should the Fed confirm a pause in rate hikes, that should be the catalyst for bullion's return back above the $2,000 level, Tan added. Although bullion is known as an inflation hedge, rising rates tend to dull the zero-yielding asset's appeal.
Investors also took stock of JPMorgan Chase & Co.'s announcement it had acquired a substantial majority of assets and assumed certain liabilities of First Republic Bank. Gold prices rose more than 1% in April as concerns over turmoil in the U.S. banking sector enhanced its safe-haven appeal for investors.
" (However) if the Fed comes out unexpectedly hawkish, then it won't bode well for gold," said Ilya Spivak, head of global macro at Tastylive.
On the physical front, India's gold imports from the UAE
could increase with better use of a trade deal between the two
countries, India's Trade Secretary Sunil Barthwal told an event
on Monday.
Spot silver rose 1% to $25.29, platinum gained
0.5% to $1,079.19, while palladium was little changed at
$1,500.48.
Many Asian and Europe markets were closed on Monday for the
May Day holiday.
(Reporting by Ashitha Shivaprasad and Arundhati Sarkar in
Bengaluru; editing by Uttaresh Venkateshwaran, Rashmi Aich and
Barbara Lewis)
