PRECIOUS-Gold holds ground as Ukraine risks offset Fed rate views

BY Reuters | ECONOMIC | 01/26/22 12:56 AM EST

(Updates prices)

* Gold hovers near 2-month peak, FOMC meeting to end on Wednesday

* Spot gold may rise into a range of $1,860 to $1,872/oz - technicals

By Asha Sistla

Jan 26 (Reuters) - Gold prices were steady on Wednesday as investors refrained from making big bets ahead of a decision on the pace of policy tightening by the U.S. central bank, while tensions surrounding Ukraine kept bullion near the previous session's 10-week high.

Spot gold held its ground at $1,847.11 per ounce, as of 0547 GMT, after hitting its highest level since Nov. 19 on Tuesday. U.S. gold futures were down 0.2% at $1,848.30.

Gold will be supported "as long as they (the Fed) don't spook the markets with anything new, as long as they don't advance the narrative and things sound basically about where they are, which is 3 to 4 rate hikes this year," DailyFX currency strategist Ilya Spivak said.

The U.S>. Federal Reserve's two-day meeting will end later in the day, and Fed funds futures have fully priced in a quarter-point tightening for the March meeting, plus three more for 2022.

Although gold is considered a hedge against inflation and geopolitical risks, interest rate hikes would raise the opportunity cost of holding non-yielding bullion.

Expected rate hikes by the Fed may delay emerging Asia's economic recovery and keep pressure on policymakers to guard against the risk of capital outflows, a senior International Monetary Fund official said on Tuesday.

U.S. President Joe Biden has said he would consider personal sanctions on President Vladimir Putin if Russia invades Ukraine, as Western leaders stepped up military preparations and made plans to shield Europe from a potential energy supply shock.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose about 0.5% to 1,013.10 tonnes on Tuesday.

Spot gold may rise into a range of $1,860 to $1,872 per ounce, as it has pierced above a resistance at $1,850, according to Reuters' technical analyst Wang Tao.

Spot silver shed 0.6% to $23.68 an ounce. Palladium fell 0.7% to $2,184.34, while platinum was steady at $1,025.36. (Reporting by Asha Sistla in Bengaluru; Editing by Sherry Jacob-Phillips)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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