Gold prices hit their biggest daily rise in a month but then ended almost flatamid falling bond yields and as investors awaited clues on the path of interest rates at the US Federal Reserve’s policy meeting.
Spot gold reached US$2,017.33 an ounce, a peak since April 14, although it finally closed at US$2,016.20 while gold futures in the United States ended at US$ $2,025.00.
The two-day meeting of the Fed’s Federal Open Market Committee ends on Wednesday and the market expects the US central bank to decide to raise rates by 25 basis points.
Although gold is considered a hedge against economic uncertainties, the rise in rates harms the demand for this asset, which does not accrue interest.
“Banking concerns are back…the risk that the Fed is possibly considering a June rate hike is really going away.” said Edward Moya, OANDA’s senior market analyst.
Shares of US regional lenders extended their declines, while Treasury yields fell as the collapse of the First Republic Bank continued to spread fears through the markets.
Regulators seized First Republic Bank and sold its assets to JPMorgan Chase & Co on Monday in a deal to resolve the biggest US bank failure since the 2008 financial crisis.
In other precious metals, spot silver was up 1.6% at $25.38 an ounce; palladium fell 0.8% to $1,439.58; and platinum rose 1.1% to $1,060.84.
Source: Ambito
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