Gold cuts early losses on weaker dollar; Fed in focus

By Apeksha Nair

REUTERS - Gold prices inched up on Tuesday as the dollar edged lower, with investors awaiting cues from a series of upcoming central bank policy meetings and U.S. economic data.

Of the various central bank policy meetings due this week, the Federal Open Market Committee meeting due Tuesday and Wednesday will be closely monitored for clues on the timing of a possible interest rate hike.

October U.S. non-farm payrolls data is due Friday.

Spot gold was up 0.13 percent at $1,278.99 per ounce by 0733 GMT, while U.S. gold futures for December delivery rose 0.52 percent to $1,279.70.

"Momentum, at present, seems to be favouring upside for gold and silver, although we are climbing at snails pace," MKS Group trader Alex Thorndike said in a note.

 

"We anticipate volatility to perhaps pick up into the Presidential election date next week."

Spot gold may break resistance at $1,280 per ounce and rise more to the next resistance at $1,293, as suggested by its wave pattern and Fibonacci ratio analysis, according to Reuters technical analyst Wang Tao.

Markets were pricing in around a 78 percent chance the Fed will raise rates in December, but just a 6 percent chance of a hike this week, according to the CME Group's FedWatch Tool.

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.

The dollar index, which measures the greenback against a basket of major currencies, inched lower by about 0.1 percent at 98.332.

The dollar index has fallen about 0.5 percent since Friday's opening after the FBI revealed it reopened an investigation of U.S. Democratic presidential candidate Hillary Clinton's use of a private email system.

"Certainly the FBI's probe into Clinton's emails makes things more uncertain with people locking into gold for a little while I think," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

Among other precious metals, silver was up about 0.5 percent at $17.95 per ounce.

Platinum rose 0.56 percent to $982.00 per ounce and palladium gained 0.77 percent, to $623.25.

(Reporting by Apeksha Nair and Koustav Samanta in Bengaluru; Editing by Michael Perry and Joseph Radford)