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Gold firms as dollar dips post U.S. verdict, Fed in focus

Reuters  |  BENGALURU 

By Layek

BENGALURU (Reuters) - Gold pared some gains on Wednesday but held firm as the dollar slid after the U.S. midterm elections delivered a split and as investors looked ahead to a Federal Reserve meeting for signals on future interest rate hikes.

Spot gold was up 0.2 percent at $1,229.33 per ounce at 1500 GMT, having earlier hit $1,235.83, while U.S. gold futures rose 0.4 percent to $1,230.60 .

"The split government is unlikely to impact gold much. Gold has been rather inured to geopolitical developments this year... The biggest for gold remains the USD and its reaction has been reasonable given the dip in the dollar," said Tai Wong, trading at BMO.

The dollar index fell, making bullion more attractive for holders of other currencies as a split dampened expectations for a major fiscal policy boost to the economy. [USD/] [MKTS/GLOB]

"Gold seems happy in a $1,215-45 range for now as we await the next real change in the trade chessboard," Wong said.

Investors have largely opted for the safety of the greenback rather than gold, a traditional safe haven, this year as a U.S.- trade row continues.

Democrats won control of the U.S. House of Representatives, giving them the opportunity to block Donald Trump's push for a further round of tax cuts and deregulation - measures that have boosted the U.S. economy, stock markets and the dollar, and have kept the on a policy-tightening path.

Market participants are now keeping a close eye on a two-day meeting set to begin on Wednesday to gauge the outlook for U.S. monetary policy.

"No change in the rate is expected. But investors and traders will be listening to hear if there are any changes in 2019 rate hike predictions," Walter Pehowich, of at said in a note.

The Fed raised U.S. rates in September and said it planned four more increases by the end of 2019 and another in 2020, citing steady economic growth and a robust jobs market.

Meanwhile, holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, fell for the third straight session to 756.70 tonnes on Tuesday. [GOL/ETF]

Among other precious metals, silver rose 0.7 percent to $14.63 per ounce, while palladium jumped 1.9 percent to $1,136.80 per ounce.

Platinum was up 0.9 percent at $875.30 an ounce after hitting $877.50, its highest in more than four months.

(Reporting by Layek and in Bengaluru; Editing by Susan Thomas)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, November 07 2018. 20:56 IST
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