Gold Down Ahead of Fed Policy Decision, Ukraine Tensions Dampen Risk Appetite By Investing.com

By Gina Lee

Investing.com – Gold was down on Wednesday morning in Asia, after geopolitical concerns over Ukraine decreased risk appetite. Investors also await the US Federal Reserve’s.

were down 0.29% to $ 1,847.10 by 11:56 PM ET (4:56 AM GMT), after hitting its highest level since Nov. 19, 2021, at $ 1,852.65.

Russia expressed “great concern” after the US put 8,500 troops on alert to be ready to deploy in case of a Russian invasion of Ukraine. The UK also urged its European allies to have sanctions ready in the event of an escalation.

The safe-haven yellow metal is acting as a “flight to safety trade” in a wait-and-watch scenario until after the Fed announcement, RJO Futures senior market strategist Bob Haberkorn told Reuters.

The announcement, due later in the day, will be closely scrutinized for clues on how aggressive the Fed would be for the rest of 2022 and if it would signal more interest rate hikes to tackle inflation, he added.

The Fed is widely expected to hike interest rates in March 2022, followed by three more hikes throughout the year.

“Despite the Fed likely to announce the start of a US rate hike cycle this week, gold keeps holding up well. Support for the yellow metal comes from high inflation and elevated market volatility,” UBS analyst Giovanni Staunovo told Reuters.

“Unless the Fed surprises with an even more hawkish statement, gold could stay supported,” as historically, gold outperforms equities when market volatility increases, Staunovo added.

The also hands down its policy decision later in the day, followed by the on Thursday. In Asia Pacific, the will hand down its policy decision in the following week.

In other precious metals, silver inched down 0.1%, while platinum inched up 0.1% and palladium jumped 2.3%.