Gold prices fall in early trade

23 Mar 2023 , 09:39 AM

After reaching above $2,000 an ounce in the previous session, gold prices fell for a second day on Tuesday as investors focused on the U.S. Federal Reserve’s interest rate decision rather than the financial issue.

Spot gold was down 0.6% at $1,966.30 per ounce, while U.S. gold futures were down 0.6% at $1,971.10.

The metal had topped $2,009.59 an ounce on Monday, its best since March 2022 but quickly started to decline.

With the failure of Silicon Valley Bank in the United States earlier this month, gold has increased by over $100 as investors flocked to the safe haven.

Following a slew of measures to stabilize the industry, European shares increased by almost 1%, with banking equities leading the recovery as investors hoped for less aggressive actions from the Fed.

The CME FedWatch tool indicates that markets are pricing in a 16.6% possibility that the Fed will maintain its current policy at the conclusion of its March 21–22 meeting and an 83.4% chance that it would increase rates by 25 basis points (bps).

Falling interest rates make non-yielding bullion more attractive by reducing the opportunity cost of owning it.

Benchmark U.S. 10-year Treasury yields increased, putting additional pressure on gold.

Spot silver prices dropped by 0.3% to $22.46 an ounce, platinum dropped by 1.1% to $977.57, and palladium dropped by 0.8% to $1,403.48.

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