Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Gold Down Hawkish Fed Limits Gains Even as Ukraine War Concerns Continue

Published 03/23/2022, 01:06 AM
Updated 03/23/2022, 01:10 AM
© Reuters.

© Reuters.

By Gina Lee

Investing.com – Gold was down on Wednesday morning in Asia, holding steady as the ongoing war in Ukraine supported demand for the safe-haven yellow metal. However, calls from U.S. Federal Reserve policymakers to quicken interest rates weighed on market sentiment.

Gold futures inched down 0.02% to $1,921.20 by 1:06 AM ET (5:06 AM GMT)

"Potential for higher interest rates globally is weighing on (gold). At the same time, the desire for safe havens in the face of the geopolitical conflict in Ukraine is supportive," Tiger Brokers chief strategy officer Michael McCarthy told Reuters.

St. Louis Fed President James Bullard called for the central bank to raise its benchmark overnight interest rate to 3% this year and move aggressively to keep inflation under control. Cleveland Fed President Loretta Mester echoed Bullard’s call, while San Francisco Fed President Mary Daly said on Tuesday that it was time to remove policy accommodation.

The market is pricing in a 72.2% probability that the Fed will hike the interest rate by 50 basis points in May 2022, with the odds for a bigger hike jumping from just over 50% on Monday. Benchmark U.S. 10-year Treasury yields also hit fresh highs since May 2019.

Fed Chairman Jerome Powell, European Central Bank President Christine Lagarde, and Bank of England Governor Andrew Bailey will also speak at the BIS innovation summit later in the day.

The optimism around a resolution to the war in Ukraine that began with Russia’s invasion on Feb. 24 is starting to fade, leaving some investors to think that there is potential for a break to the upside, said McCarthy. The West could also announce more sanctions on Russia.

Spot gold may fall into a range of $1,891 to $1,903 per ounce, as the downtrend from the Mar. 8 high of $2,069.89 seems to have continued, according to Reuters technical analyst Wang Tao.

In other precious metals, silver was up 0.3% and palladium jumped 3.2% to $2,565.02, while platinum edged down 0.2%.

Latest comments

Hedge vs inflation will Trump all other inhibiting factors, like, rates, so will demand, with more production using it than ever before, like, oil. Target 2777 by May 1
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.