Washington, DC, May 3 (BNA): Gold prices held above the key $2,000 level on Wednesday, as investors turned their attention to the US Federal Reserve’s interest rate decision due later in the day.
Spot gold settled at $2017.54 an ounce by 0335 GMT, after rising more than 1% in the previous session, as yields fell on renewed fears of contagion in the US banking sector.
US gold futures rose 0.2% to $2,026.50, Reuters reported.
The Fed rate decision will be announced at 1800 GMT. Investors mostly expect the US central bank to raise interest rates by 25 basis points, but are looking for clues as to its next steps.
“If the Fed were to surprise with a pause, that would indicate a deep banking crisis and would likely send gold higher,” said Clifford Bennett, chief economist at ACC Securities.
Bullion is known as a hedge against inflation and economic turmoil, but higher rates tend to dilute the attractiveness of zero-yielding assets.
Data on Tuesday showed that job openings in the United States fell in March and layoffs rose to the highest level in more than two years, pointing to some softening in the labor market.
If doubts about the banking crisis and concerns about a possible US debt default persist, Bennett said, the dollar will lose its luster and more lights will fall on gold.
Top Republican senators on Tuesday called on President Joe Biden to accept their party’s debt-ceiling package or make a counter-offer, while a top Democrat said the Senate could try to push a “clean” debt-ceiling hike next week.
On the physical front, sales of gold products at the Perth Mint in April fell more than 6% month over month, while silver sales hit a six-month high.
Spot silver fell 0.3% to $25.32 an ounce.
Platinum fell 0.5% to $1,060.16, while palladium rose 0.6% to $1,437.33.
A Reuters poll showed that analysts cut their forecasts for palladium after its price fell by 60%, but that higher auto production should limit any selling.
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