Prices of the yellow metal stayed firm on Wednesday ahead of the Fed's review, after a more than 2-percent decline a day earlier.
The Fed is widely expected to raise rates by 25 basis points on Wednesday, amidst a shocking banking crisis over the past fortnight that apparently forced the Fed to give precedence to financial stability over price stability. The concerns over the banking crisis and a feared contagion have instilled hopes that the Fed would not be able to continue hiking rates as much as it wants to tame persistent inflation.
Gold has benefited most from the sudden confluence of interest rate risk, liquidity risk and funding risk that engulfed the banking sector all of a sudden. The drop in yields triggered by the crisis reduced the opportunity cost of holding non-interest yielding yellow metal whilst the fresh bout of instability increased the precious metal's safe haven appeal.
The Dollar Index (DXY), a measure of the Dollar's relative strength against a basket of six currencies has dropped 0.21 percent overnight to 103.04. The day's range was between a month's low of 102.98 and 103.26.
Gold Futures for April Settlement gained 0.01 percent to trade at $1,941.30. The day's trading range has been between $1,937.05 and $1,949.30. Gold prices had touched a high of $2,014.90 on Monday.
Spot Gold has dropped 0.12 percent to trade at $1,938.34 per troy ounce. The day's trading range has been between $1,934.36 and $1,946.24.
