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Gold steady as markets cautious ahead of U.S. Fed statement

Reuters  |  BENGALURU 

By Karen Rodrigues

BENGALURU (Reuters) - Gold prices held steady on Wednesday after falling to a one-week low in the previous session, as investors waited for clues on the pace of future interest rate hikes by the when its policy meeting concludes later in the day.

Spot gold was little changed at $1,295.02 per ounce at 0634 GMT after it touched a one-week low of $1,292.60 in the previous session.

U.S. gold futures for August delivery were 0.1 percent lower at $1,298.50 per ounce.

"The rate hike is almost a done deal, it is quite clear that they will most likely increase rates by another 25 basis points, but the market watchers are looking very closely on the language rather than the rate hike," said

"People will be looking very closely to see if there's any forward guidance that will indicate if there will be a fourth rate hike into the year-end."

U.S. monthly consumer inflation rose moderately in May, suggesting the Fed could continue to gradually raise interest rates this year.

The is expected to announce its decision on rates at 2 p.m. EDT (1800 GMT).

"We could see further weakness (in gold prices) heading into the Fed meeting on Wednesday, as the dollar might rally going into the policy statement," said in a note.

The dollar, which measures the greenback against a basket of six major currencies, was up 0.2 percent at 110.55 yen, after touching 110.68, its highest since May 23. [USD/]

Gold is highly sensitive to U.S. interest rates, which lift the opportunity cost of holding non-yielding bullion and boost the dollar, in which it is priced.

"Beyond the Fed, the ECB meeting tomorrow will also be important. Both the meetings have come hand-in-hand in trying to think about how gold prices will move," OCBC's Gan said.

The (ECB) meets on Thursday, when it could signal intentions to start unwinding its massive bond purchasing programme.

The Bank of Japan's two-day monetary policy meeting also begins Thursday.

The is biased to drop sharply towards a range of $1,263-$1,278 per ounce, as its consolidation within a wedge is ending, said.

In other precious metals, silver fell 0.2 percent to $16.83 an ounce. It hit a seven-week high of $16.95 in the previous session.

Palladium was nearly unchanged at $1,018.41.

Platinum was 0.5 percent lower at $889.80 per ounce, after hitting a one-week low of $889.40 earlier in the session.

(Reporting by and in Bengaluru; Editing by and Biju Dwarakanath)

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

First Published: Wed, June 13 2018. 12:51 IST