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Gold subdued ahead of Fed Chair speech, G20 summit

BENGALURU (Reuters) - Gold prices inched lower on Tuesday while investors awaited clues on the pace of future U.S. interest rate hikes and as the U.S.-China trade spat sours ahead of a G20 summit.

An employee sorts gold bars in the Austrian Gold and Silver Separating Plant in Vienna, Austria, December 15, 2017. REUTERS/Leonhard Foeger/Files

Spot gold inched 0.1 percent lower to $1,221.70 per ounce at 0337 GMT.

U.S. gold futures were little changed at $1,222.1 per ounce.

Investors will hold steady until the minutes of the Federal Reserve meeting are released and more clarity emerges around the trade conflict leading into the G20 summit, said ANZ analyst Daniel Hynes.

In an interview with the Wall Street Journal, U.S. President Donald Trump said he expects to move ahead with raising tariffs on $200 billion in Chinese imports to 25 percent from the current 10 percent, and repeated his threat to slap tariffs on all remaining imports from China.

The comments ran counter to recent speculation about a possible deal when Trump meets with Chinese President Xi Jinping at the G20 summit in Buenos Aires later this week.

“When these concerns have elevated, investors have tended to seek haven in the U.S. dollar itself rather than gold. It has been an issue plaguing the gold market for a while now,” Hynes said.

Gold prices have lost over 10 percent from their April peak as investors turned to the dollar as a safe haven with the trade war unfolding against a backdrop of higher U.S. interest rates.

The dollar index on Tuesday held gains and hovered near its highest level since Nov. 15.

Investors also awaited Fed Chairman Jerome Powell’s speech and minutes from Fed’s Nov. 7-8 meeting, due later this week, which will likely indicate the pace of interest rate hikes in 2019.

Slowing global growth has raised expectations the Fed may halt its tightening cycle sooner than previously expected.

Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding bullion. They also boost the dollar, in which the metal is priced.

Indicative of investor sentiment toward bullion, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.15 percent to 761.74 tonnes on Monday.

Meanwhile, hedge funds and money managers cut their net short positions in Comex gold and silver contracts in the week to Nov. 20, the U.S. Commodity Futures Trading Commission (CFTC) said on Monday.

Amongst other precious metals, spot silver was down 0.1 percent at $14.22 per ounce.

Spot platinum was up 0.3 percent at $842.50 per ounce while palladium rose 0.2 percent to $1,143.50.

Reporting by Karthika Suresh Namboothiri and Eileen Soreng in Bengaluru; Editing by Sunil Nair