Gold Above $2,000 As Market Awaits Us Fed Rate Decision

May 3 - Gold prices held steady above the key $2,000 level on Wednesday, while investors turned their attention to the U.S. Federal Reserve's interest rate-hike verdict due later in the day.

Spot gold held its ground at $2,016.29 per ounce by 0140 GMT after rising more than 1% in the previous session, as yields dropped on renewed fears of contagion in the U.S. banking sector.

U.S. gold futures were up 0.1% at $2,026.10.

Fed's rate decision is due at 1800 GMT. The market mostly expects the U.S. central bank to raise interest rates by 25 basis points.

"If the Fed were to surprise with a pause, this would suggest a deepening banking crisis and would likely send gold higher," said Clifford Bennett, chief economist at ACY Securities.

Bullion is known as a hedge against inflation and economic turbulence, but higher rates tend to dent a zero-yielding asset's appeal.

Data on Tuesday showed that U.S. job openings dropped in March and layoffs increased to the highest level in more than two years, suggesting some softening in the labour market.

If uncertainties about the banking crisis and concerns over a potential U.S. debt default persist, the dollar will lose its shine and more light will fall on gold, Bennett said.

Top U.S. Senate Republicans on Tuesday called on President Joe Biden to accept their party's debt-ceiling package or make a counter-offer, while a top Democrat said the Senate might try to advance a "clean" debt-ceiling hike next week.

Spot silver was down 0.2% at $25.33 per ounce.

Platinum fell 0.4% to $1,061.53, while palladium gained 0.4% to $1,434.62.

A poll of analysts revealed a reduction in palladium forecasts due to a drop in prices caused by its use in engine emissions control. However, the potential for increased vehicle production is expected to prevent significant sell-offs.