Gold Prices Are Steady In Cautious Anticipation Of Fed Meeting

May 2 - Gold prices were flat on Tuesday, as cautious market participants awaited fresh cues from top central banks on their monetary policy plans, especially from the U.S. Federal Reserve.

Spot gold was little changed at $1,983.89 per ounce by 0652 GMT. U.S. gold futures were steady at $1,992.10.

The Fed, which meets on May 2-3, is widely expected to raise interest rates by 25 basis points.

Gold prices could move towards $2,000 if the Fed highlights recession worries and hints at a pause in the rate hike cycle, said Ajay Kedia, director at Kedia Commodities in Mumbai.

U.S. manufacturing contracted in April but there was a build-up of inflation pressures, supporting expectations of a Fed rate hike, according to data released on Monday.

The European Central Bank (ECB) is also likely to increase its rates for the seventh straight meeting on Thursday.

Bullion is known as a hedge against inflation and economic uncertainties, but rising rates tend to diminish demand for the zero-yielding asset.

On Monday, gold prices briefly rose above $2,000 after regulators seized and sold First Republic Bank's (FRC.N) assets to JPMorgan Chase & Co (JPM.N), in a deal to resolve the largest U.S. bank failure since the 2008 financial crisis and draw a line under a lingering banking turmoil.

"Our expectation is for gold to moderate and decline over 2023 as the stimulus measures in China begin to have an effect... It will reduce the perceived need to hold more conservative assets like gold," said Michael Langford, director at corporate advisory AirGuide.

Spot silver fell 0.4 % at $24.88 per ounce.

"We are bullish on silver as its industrial demand is going to be high in 2023. Prices could hit $32," Kedia added.

Platinum lost 0.1% to $1,049.15 while palladium edged 1% higher to $1,466.26.