© Reuters.
By Ambar Warrick
Investing.com– Gold prices moved in a tight range on Wednesday, stabilizing after a sharp drop in the prior session as markets hunkered down ahead of a Federal Reserve interest rate decision, while easing fears of a banking crisis spelt lesser safe haven demand for the yellow metal.
Bullion prices were nursing sharp losses from the prior session, as government intervention helped calm fears over a looming crisis in the U.S. and European banking system. This in turn saw markets dump gold at one-year highs, given that the yellow metal’s recent rally was largely driven by safe haven demand.
Easing fears of a bank crisis also saw markets begin pricing in a greater possibility that the Fed will remain unwavering in its fight against inflation. The prospect of rising interest rates bodes poorly for zero yield assets like gold.
was flat at $1,940.80 an ounce, while rose 0.4% to $1,944.10 an ounce by 22:09 ET (02:09 GMT). Both instruments sank nearly 2% each on Tuesday, pulling back sharply from a one-year high.
The losses also saw gold fall from the coveted $2,000 an ounce level, which analysts say will take many more positive cues to reach.
Focus is now on the results of the Federal Reserve’s two-day meeting later in the day, with the central bank widely expected to , as it moves to curb hotter-than-usual inflation.
But the Fed’s outlook on monetary policy will be closely watched amid growing pressure on the economy. The recent collapse of three regional U.S. banks was largely due to their vulnerability to rising interest rates, which could be shared by other medium to small-sized lenders in the country.
Fears of the banking crisis fueled a stellar rally in gold and precious metal prices over the past week.
Other precious metals edged higher on Wednesday, but were nursing steep losses from the prior session. rose 0.4%, while added 0.6%.
Among industrial metals, copper prices retreated after logging four straight sessions of strong gains. Easing fears of a banking crisis were the biggest drivers of the red metal, which had tumbled to two-month lows on concerns over slowing demand.
fell 0.3% to $3.9928 a pound, but were up nearly 4% in the past four sessions.
Investing.com
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