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Gold has found support from banking stress - analyst
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FOMC starts two-day meeting on interest rates
(Adds comment and updates prices)
By Arundhati Sarkar
May 2 (Reuters) - Gold ticked up on Tuesday on concerns
surrounding the U.S. banking crisis and debt ceiling
negotiations, while traders also braced for clues on the path of
interest rates from the U.S. Federal Reserve's policy meeting.
Spot gold rose 0.2% to $1,986.53 per ounce by 1241
GMT while U.S. gold futures inched up 0.1% to $1,994.70.
The Federal Open Market Committee's two-day meeting starts
later in the day, where it is widely expected to raise rates by
25 basis points. Gold has been trading fairly steady ahead of the Fed
meeting, also supported by some safe-haven demand from the
resurgence of worries over the banking sector's health as well
as U.S. debt ceiling uncertainty, Bank of China International
analyst Xiao Fu said.
U.S. President Joe Biden on Monday summoned the four top
congressional leaders to the White House next week after
Treasury Secretary Janet Yellen warned the government could run
short of cash to pay its bills by June.
Gold clocked a more than 1% gain in April amid the U.S.
banking crisis and briefly rose above $2,000 on Monday after
regulators seized sold First Republic Bank's assets to
JPMorgan Chase & Co , in a deal to resolve the largest
U.S. bank failure since the 2008 financial crisis.
While gold is considered a hedge against economic
uncertainties, rising rates hurt demand for the zero-yielding
asset.
Separately, any unexpected outcome from the European Central
Bank meeting on Thursday, which is expected to conclude with a
25bp rate hike may influence the euro, and in turn the dollar,
and trickle down to gold, said Lukman Otunuga, senior research
analyst at FXTM.
Elsewhere, spot silver fell 1% to $24.72 per ounce,
platinum was down 0.6% at $1,043.51 and palladium fell 0.2% to $1,448.34 per ounce.
(Reporting by Arundhati Sarkar and Ashitha Shivaprasad in Bengaluru; Editing by Anil D'Silva and Louise Heavens)
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