Gold prices ease as market focus turns to US Fed meeting

GOLD prices edged down on Tuesday (Mar 21), with investors looking forward to the Federal Reserve policy meeting as expectations grew that the US central bank could pause raising its interest rates given the upheaval among banks.

Spot gold was down 0.1 per cent at US$1,977.69 per ounce, as of 0044 GMT. US gold futures also fell 0.1 per cent to US$1,981.30.

Gold prices had shot up to their highest level since March 2022 at US$2,009.59 in volatile trading on Monday before retreating, as investors digested the impact of measures taken by several central banks to contain a banking crisis and stabilise global financial markets.

Swiss lender UBS agreed to buy rival Credit Suisse on Sunday for US$3.23 billion and assume up to US$5.4 billion in losses, in a shotgun merger engineered by Swiss authorities.

Markets are pricing in a 53 per cent chance that the US policymakers will hold their benchmark lending rate in the current 4.50 per cent-4.75 per cent range at the end of their closely-watched March 21-22 policy meeting.

European Central Bank policymaker Robert Holzmann on Monday watered down his recent call for three further interest-rate increases of 50 basis points in quick succession.

Gold tends to benefit from low-interest rates as it reduces the opportunity cost of holding non-yielding bullion.

The dollar edged up 0.1 per cent, making bullion less attractive for buyers holding other currencies.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.38 per cent to 924.55 tonnes on Monday from 921.08 tonnes on Friday.

SEE ALSO

Gold prices drop 1% after Credit Suisse-UBS deal spurs risk-on mood

Spot silver edged down 0.1 per cent to US$22.49 per ounce, platinum was flat at US$988.33 and palladium was listless at US$1,413.97. REUTERS