By Jan Harvey
LONDON (Reuters) - Gold steadied just above $1,250 an ounce on Wednesday, taking a breather after the previous day's fall as investors awaited minutes of the Federal Reserve's latest meeting for clues on the outlook for U.S. interest rates.
The metal is highly sensitive to rising U.S. rates, which increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
Spot gold XAU= was at $1,251.83 an ounce at 1330 GMT, little changed from $1,250.76 late on Tuesday, when it slipped 0.7 percent after two days of gains.
The minutes of the Federal Open Market Committee's early May meeting are due to be released at 1800 GMT. Interest rate futures on Tuesday implied traders saw about an 83 percent chance of a rate increase in June, up from 79 percent on Monday.
"(We're in) wait and see mode ahead of the FOMC minutes later today and the OPEC meeting tomorrow," Commerzbank analyst Carsten Fritsch said, adding that the Fed is likely to signal further gradual rate hikes.
Expectations for U.S. interest rates to rise next month and potentially again later in the year have been a major factor in keeping gold prices pinned below chart resistance at $1,300 an ounce this year.
Gold has risen 3 percent since hitting a near-two month low of $1,213.81 on May 9, driven chiefly by political turmoil in the United States after President Donald Trump fired FBI director James Comey, which prompted a drop in stock markets and put the dollar under pressure.
"While the selling appetite seems to be fading following four weeks of long liquidation, (gold) still needs a catalyst to break higher," Saxo Bank's head of commodity research Ole Hansen said.
"At this stage the risk-reward seems skewed to the upside, but with the multi-year downtrend lurking just above I see muted fund interest until a potential break has been realised."
World stock markets eased on Wednesday after China's sovereign credit rating was downgraded and as investors eyed a pause in Wall Street's four-day winning streak, the longest in over three months. The dollar was little changed against a currency basket. [MKTS/GLOB]
U.S. gold futures for June delivery were down $3.30 an ounce at $1,252.20.
Among other precious metals, silver was up 0.1 percent at $17.04 an ounce, while platinum was 0.1 percent higher at $940.60 an ounce. Both hit their highest since late April in the previous session.
Palladium was down 1.4 percent at $760 an ounce.
(Additional reporting by Vijaykumar Vedala in Bengaluru, editing by David Evans and Ed Osmond)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
