Gold holds tight range as Fed verdict nears
- Fed statement due at 1800 GMT
- A hawkish Fed could see gold decline – analyst
- Swiss gold exports to China, India rebound
March 22 (Reuters) – Gold prices ticked higher but traded in a relatively tight range on Wednesday as investors hunkered down for the Federal Reserve’s interest rate decision.
Spot gold was up 0.3% at $1,945.55 per ounce as of 0949 GMT, after dropping 2% in the previous session. U.S. gold futures edged 0.3% higher to $1,946.60.
The U.S. central bank’s rate decision is expected at 1800 GMT, followed by a press conference by Fed Chair Jerome Powell. The Fed is mostly expected to increase rates by 25 basis points, according to the CME FedWatch tool.
Driving some of the small gains in gold was a softer dollar , which makes bullion cheaper for those holding other currencies.
“A 25 bps hike would be neutral for gold,” said Quantitative Commodity Research analyst Peter Fertig.
“(But) if the Fed decides to keeps rates unchanged, it should be positive for gold as it will reduce the opportunity cost of holding it and the U.S. dollar will also weaken,” Fertig added.
Bullion recently hit an one-year high and breached the key $2,000 level in a strong rally driven by safe-haven demand after the collapse of U.S.-based Silicon Valley Bank, which quickly ensnared lender Credit Suisse.
However, prices retreated after the rescue of Credit Suisse drove a tentative rebound in appetite for riskier assets.
A hawkish Fed could see gold decline, with $1,900 being the next big test below, followed by $1,860, said Craig Erlam, senior market analyst at OANDA, in a note.
On the physical front, Switzerland’s exports of gold to China and India rebounded in February, Swiss customs data showed on Tuesday.
Spot silver gained 0.3% to $22.44 per ounce, while platinum rose 1.3% to $981.47 and palladium was unchanged at $1,387.62.
Reporting by Ashitha Shivaprasad in Bengaluru
Editing by Mark Potter
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