Gold prices rose on Tuesday as investors awaited the Federal Reserve (the U.S. central bank) meeting, amid increasing expectations that it will slow the pace of tightening its monetary policy in light of turmoil in the banking sector. Spot gold climbed 0.2% to $1982.29 per ounce by 0546 GMT. U.S. gold futures increased by 0.1% to $1984.30.
Regarding other precious metals, silver gained 0.2% in spot transactions to $22.57 per ounce, platinum fell 0.2% to $986.53, and palladium rose 0.2% to $1417.54.
CME's FedWatch Tool indicates that markets expect a 26.9% chance that the Federal Reserve will maintain its position at the end of the meeting scheduled for March 21-22, raising interest rates by 50 basis points, while there is a 73.1% probability that it will raise them by 25 basis points.
Amid volatile trading on Monday, gold prices initially dropped by 1% but reversed to reach their highest levels since March 2022 at $2009.59 after investors absorbed the impact of measures taken by several central banks to contain the banking crisis and stabilize global financial markets.
Analysts at ANZ noted in a memo, "Although banking regulators rushed to bolster market confidence, the cloudy macroeconomic backdrop still entices investors to buy gold." Gold is considered a safe haven in times of financial uncertainty, and lower interest rates make non-yielding bullion more attractive as they reduce the opportunity cost of holding it.
