Gold prices dip as Investors lock in profits

LONDON (March 18) Gold prices XAU/USD fell 0.4% to $1,910.95 an ounce, while gold futures fell 0.9% to $1,914.50 an ounce by 02:15 GMT, as investors locked in recent profits.

This comes after a sharp rally in gold prices earlier this week, driven by concerns of a banking crisis among US and European banks. However, fears of an imminent crisis have eased slightly after Credit Suisse announced its decision to exercise a $54 billion credit facility from the Swiss National Bank to boost its liquidity.

Despite the recent dip in gold prices, any pauses in the Federal Reserve’s rate-hike cycle would benefit the precious metal. It would increase its appeal against the dollar and limit the opportunity cost of holding non-yielding assets. The Fed Fund futures prices show that markets are pricing in a 54.6% chance of a 25 basis point rate hike next week, but also a 45.4% chance that the bank will stand pat on rates.

Although rising interest rates have battered metal markets in 2022, concerns about global economic turmoil have boosted the demand for gold as a hedge against inflation and uncertainty.

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