Gold Down; Warning Fed Limits Gains

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

Tiger Brokers chief strategy officer Michael McCarthy told Reuters that the potential for higher interest rates globally depends on gold. At the same time, the fixation for safe havens in the face of the geopolitical conflict in Ukraine is supportive.

St. Louis Fed President James Bullard reached for the central bank to increase its benchmark overnight interest rate to 3% this year and move aggressively to control inflation. Cleveland Fed President Loretta Mester repeated Bullard’s call. At the same time, San Francisco Fed President Mary Daly stated it was time to remove policy accommodation on Tuesday.

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

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

The West Could Also Promote More Sanctions on Russia

The optimism around a solution to the war in Ukraine that started with Russia’s invasion on Feb. 24 is beginning to fade, leaving some investors to think that there is a possibility for a break to the upside, said McCarthy. Spot gold may drop into a range of $1,891 to $1,903 per ounce, as the downtrend from the Mar. Eight high of $2,069.89 appears to have continued, according to Reuters technical analyst Wang Tao.

Silver was higher 0.3% in other precious metals, and palladium bounced 3.2% to $2,565.02, while platinum edged down 0.2%.