Gold prices hold steady ahead of Fed rate decision

By Peter Hobson

LONDON (Reuters) - Gold prices held steady on Wednesday as investors waited for the results of a Federal Reserve meeting later in the day that is expected to raise U.S. interest rates and hint at the outlook for future rate increases.

Gold is sensitive to higher rates because they push up U.S. bond yields, reducing the attraction of non-yielding bullion, and tend to boost the dollar, making gold more expensive for buyers with other currencies.

A rate hike - the third this year - in an announcement at 1800 GMT is anticipated and is therefore unlikely to shift prices, said FOREX.com analyst Fawad Razaqzada.

Investors will instead be looking to the Fed's economic and interest rate projections and a news conference by Chairman Jerome Powell for something to shift gold from its recent trading range of $1,190-$1,210 an ounce.

"If the Fed appears more dovish than expected we may see a break-out for gold," Razaqzada said, adding that without a surprise, gold was unlikely to move much.

"If we break (technical resistance at) $1,205-$1,215, at a minimum we could go to $1,240," he said.

Spot gold was down 0.2 percent at $1,198.21 an ounce at 1058 GMT, remaining close to a 19-month low of $1,159.96 reached last month.

U.S. gold futures were also 0.2 percent lower at $1,202.90 an ounce.

Gold has fallen around 12 percent from an April high as a vibrant U.S. economy and fears of a global trade war have caused the dollar to rally.

Investors looking for a safe place to park assets have preferred the U.S. currency to bullion, undermining gold's traditional role as a safe haven, while money managers have ramped up bets that gold prices will fall.

The greenback has weakened slightly against a basket of major currencies over the past week but is up more than 5 percent since April.

On the technical side, analysts at Commerzbank said gold was stuck beneath resistance at its 55-day moving average at $1,207.76 and its 4-month downtrend at $1,220.

They said prices would likely move lower and that their long-term outlook had become more negative since gold broke below its 2005-2018 uptrend line, now around $1,215.

In other precious metals, silver was up 0.4 percent at $14.48 an ounce after touching a three-week high on Tuesday.

Platinum had gained 0.1 percent to $823.24 an ounce and palladium was up 0.3 percent at $1,064 an ounce, near an 8-month high of $1,068.50 reached in the previous session.

(Additional reporting by Vijaykumar Vedala in Bengaluru; Editing by Mark Potter)