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(Investing.com) – Gold was down on Wednesday morning in Asia, holding steady as the ongoing war in Ukraine supported demand for the safe-haven yellow metal.
However, calls from U.S. Federal Reserve policymakers to quicken interest rates weighed on market sentiment.
Gold futures inched down 0.02% to $1,921.20 by 1:06 AM ET (5:06 AM GMT)
"Potential for higher interest rates globally is weighing on (gold). At the same time, the desire for safe havens in the face of the geopolitical conflict in Ukraine is supportive," Tiger Brokers chief strategy officer Michael McCarthy told Reuters.
St. Louis Fed President James Bullard called for the central bank to raise its benchmark overnight interest rate to 3% this year and move aggressively to keep inflation under control.
Cleveland Fed President Loretta Mester echoed Bullard’s call, while San Francisco Fed President Mary Daly said on Tuesday that it was time to remove policy accommodation.
The market is pricing in a 72.2% probability that the Fed will hike the interest rate by 50 basis points in May 2022, with the odds for a bigger hike jumping from just over 50% on Monday.
Benchmark U.S. 10-year Treasury yields also hit fresh highs since May 2019.
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Fed Chairman Jerome Powell, European Central Bank President Christine Lagarde, and Bank of England Governor Andrew Bailey will also speak at the BIS innovation summit later in the day.
The optimism around a resolution to the war in Ukraine that began with Russia’s invasion on Feb. 24 is starting to fade, leaving some investors to think that there is potential for a break to the upside, said McCarthy. The West could also announce more sanctions on Russia.
Spot gold may fall into a range of $1,891 to $1,903 per ounce, as the downtrend from the Mar. 8 high of $2,069.89 seems to have continued, according to Reuters technical analyst Wang Tao.
In other precious metals, silver was up 0.3% and palladium jumped 3.2% to $2,565.02, while platinum edged down 0.2%.
