Gold Price: Investors Await Fed Decision Amid Banking Crisis Fears

NEW YORK (May 3) On Wednesday, the price of gold (XAU) is edging higher, while remaining on the strong side of the important threshold of $2,000. Gold traders are focusing on the upcoming decision by the U.S. Federal Reserve about interest rates, which was scheduled for later today at 18:00 GMT.

At 08:42 GMT, Gold (XAU) is trading $2016.30, up $0.32 or +0.02%. On Tuesday, the SPDR Gold Shares ETF (GLD) settled at $187.55, up $3.58 or +1.95%.

Spot gold is maintaining its position after increasing by over 1% during the previous session. This is due to a decrease in yields, which occurred because there are concerns about the possible spread of problems in the U.S. banking industry.

Fed Rate Decision Will Impact Gold

At 18:00 GMT, the announcement for the Fed’s rate decision will be made. While many investors anticipate the U.S. central bank to increase interest rates by 25 basis points, they are also seeking indications regarding future actions.

If the Fed were to unexpectedly halt the rate hike, it would indicate a worsening banking crisis and potentially lead to a rise in the value of gold. Bullion is recognized as a safeguard against inflation and financial instability, but an increase in interest rates typically diminishes the appeal of zero-yielding assets.

JOLTS Data Weakens Dollar

According to Tuesday’s data, job openings in the United States decreased in March, and layoffs reached their highest point in over two years, indicating a potential weakening in the labor market. If uncertainties regarding the banking crisis and fears of a possible U.S. debt default persist, the value of the dollar is likely to diminish, leading to increased attention on gold.

Senate Leaders Debate Debt Ceiling

On the same day, leading Senate Republicans urged President Joe Biden to either accept their party’s debt-ceiling proposal or present a different option. Simultaneously, a top Democrat hinted at the possibility of attempting to pass a “clean” debt-ceiling increase in the following week.

FXEmpire