Gold edges lower as banking relief, steady dollar dampen demand
As stress in the banking sector appears to subside, markets are now pricing in a 48% chance of the U.S. Federal Reserve raising interest rates by 25 basis points in May, according to the CME FedWatch tool. Bullion is seen as a hedge against inflation, but the opportunity cost of holding non-yielding gold rises when interest rates are increased to bring down inflation.
As stress in the banking sector appears to subside, markets are now pricing in a 48% chance of the U.S. Federal Reserve raising interest rates by 25 basis points in May, according to the CME FedWatch tool. Bullion is seen as a hedge against inflation, but the opportunity cost of holding non-yielding gold rises when interest rates are increased to bring down inflation.
