Gold flat as caution ahead of Fed meeting offset Ukraine risks

Reuters2022-01-25

Jan 25 (Reuters) - Gold prices were little changed on Tuesday, as investors looked for interest rate hike cues from the U.S. Federal Reserve's meeting, while safe-haven bullion was buoyed by risk-off trades over concerns of Russia-Ukraine discord.

FUNDAMENTALS

Spot gold was flat at $1,841.56 per ounce by 0117 GMT. U.S. gold futures were also steady at $1,842.90.

NATO sent reinforcements and the United States put troops on alert as Ukraine tensions rose, while Britain said it was withdrawing some staff and dependents from its embassy in Ukraine, a day after the United States said it was ordering diplomats' family members to leave.

Wall Street bounced back from a steep sell-off late in the session to close higher on Monday, with bargain hunters pushing the indexes into positive territory.

Benchmark U.S. 10-year Treasury yields fell to one-week lows on Monday, reducing the opportunity cost of holding non-interest bearing bullion.

Investors are focused on the Fed's two-day policy meeting, which starts on Tuesday, amid expectations the central bank will signal that it planned to raise rates by 25 basis points in March.

Gold is generally seen as an inflationary hedge, but it is highly sensitive to rising U.S. interest rates, which increases the opportunity cost of holding non-interest bearing bullion.

Sudan will expand its use of gold exports to cover imports of essential goods, as it embarks on a new 2022 budget without foreign aid during an economic downturn after a coup.

Spot silver fell 0.8% to $23.77 an ounce. Palladium shed 0.6% to $2,134.69 and platinum was down 0.7% to $1,019.48.

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