June 12, 2017 / 5:00 AM / 4 months ago

PRECIOUS-Gold edges up on weaker stocks, dollar ahead of Fed meeting

    * Fed meeting starts on Tuesday
    * Focus on pace of Fed rate hikes

 (updates prices, adds quote)
    By Nithin ThomasPrasad
    BENGALURU, June 12 (Reuters) - Gold inched up on Monday as
Asian stocks fell and the dollar eased ahead of a U.S. Federal
Reserve policy meeting that could give clues on the pace of
interest rate hikes over the rest of the year.
    With the Fed widely expected to raise interest rates at its
two-day meeting that ends on Wednesday, the focus will be on any
fresh hints on the pace of further tightening in the months to
come and next year, and any further details on its plans for
trimming its balance sheet.
    The focus is on whether the Fed is looking at three or four
rate hikes this year, according to Argonaut Securities analyst
Helen Lau.
    Higher interest rates tend to boost the dollar and bond
yields, putting pressure on gold prices by increasing the
opportunity cost of holding non-yielding bullion. 
    "With the UK event risk successfully negotiated, it would
appear the market is putting more emphasis on this week's FOMC
(Federal Open Market Committee) rate hike," said Jeffrey Halley,
a senior market analyst with OANDA, adding that markets had
priced in an almost 100 percent chance the Fed would lift rates.
    The market is also anxious to see if the Fed becomes more
dovish in its outlook, he said.    
    Spot gold        was up 0.1 percent at $1,266.90 an ounce as
of 0813 GMT, after shedding 1 percent in its biggest one-day
percentage decline since May 18 in the previous session
    U.S. gold futures         for August delivery fell 0.2
percent to $1,269 an ounce.
    In the wider markets, Asian stocks edged lower in early
trade on Monday following a slide by U.S. technology shares.
            
    The dollar index against a basket of currencies dipped 0.1
percent to 97.135        following its rise to a nine-day high
of 97.500 on Friday.
    Among other metals, spot palladium        was up 0.2 percent
at $892.50 per ounce after rising to a high of $911.50 an ounce,
just below a 16-year high hit on Friday.
    "The palladium market is experiencing a short-squeeze which
we believe is driven by investment demand rather than industrial
demand," Julius Baer analyst Carsten Menke said in a note.
    "Eventually, the weaker demand backdrop from automotive
catalysts should be reflected in deteriorating sentiment and
falling prices. We remain bearish and stick to our
short-recommendation." 
    Silver        was down 0.1 percent at $17.15 per ounce,
while platinum        rose 1.1 percent to $943.30 per ounce.

 (Reporting by Nithin Prasad in Bengaluru; Editing by Joseph
Radford and Subhranshu Sahu)
  

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