By Bharat Gautam

(Reuters] – On Wednesday gold stabilized, as a weaker US dollar counteracted pressure from rising U.S. Treasury yields. This is all while investors wait for the U.S. Federal Reserve to raise its interest rates in response to the Pandemic.

After touching $1,906 on Tuesday, it was at its lowest level since March 1, at $1.917.91 an ounce, at 1015 GMT. The U.S. dropped 0.3% to $1.923.40

“Bullion bears are taking a breather as they await the Fed’s highly-anticipated policy guidance,” Han Tan, chief market analyst at Exinity, said.

Tan stated that once the Fed policy signals have been fully digested, the gold market could quickly return to Russia-Ukraine’s ever-evolving war. Tan also said that an escalation in the crisis will lead to more gold prices rising.

To combat rising inflation, the U.S. central banks will likely announce their first interest rate increase in three years.

Rising U.S. rates are highly sensitive to gold, and therefore higher yields on U.S. benchmark U.S., which increases the opportunity cost for holding non-yielding silver. [US/]

Peter Fertig, Quantitative Commodity Research Analyst at Quantitative Commodity Research said that gold was doing well in spite of a greater risk-on sentiment. [MKTS/GLOB]

Fertig said that if the market is disappointed that they have not received more Fed rate increases than the Fed delivers, it could support gold and vice versa.

A dip in the U.S.dollar provided some support for greenback-priced gold bullion. [USD/]

One fundamental shift that may occur after the Ukraine crisis is over would be higher gold purchases by central banks in countries not aligned to the West as they diversify from assets such as the dollar and euro.

On Wednesday, Volodymyr Zelenskiy, President of Ukraine, stated that the prospects for peace negotiations were becoming more real, even though Russia was continuing its invasion. However, more time was necessary.

Spot silver fell 0.5% to $24.74 an ounce while platinum rose 2.7%, to $1,012.55.

Palladium increased 2% to $2471.55, moving away from Monday’s nearly two-week high, amid receding supply concerns.