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Gold little changed; markets await decision on Fed chair

(Reuters) - Gold traded sideways on Tuesday, with investors bracing for the possibility of an early announcement on the next U.S. Federal Reserve chair.

A woman is reflected in a mirror as she tries on a necklace at a jewellery showroom in Kolkata, April 21, 2015. REUTERS/Rupak De Chowdhuri/File Photo

Spot gold slipped 0.1 percent to $1,280.80 an ounce by 0700 GMT, after hitting its lowest since Oct. 6 at $1,271.86 in the previous session.

U.S. gold futures for December delivery rose 0.1 percent to $1,282.30 per ounce.

“Nothing really spurring a big selloff for gold yet. We’re waiting for currency direction... maybe people are anxious about an early announcement from Trump on the Fed chair,” said a Hong Kong-based trader.

The dollar eased against a basket of major currencies but edged up versus the yen, trading within sight of a three-month high hit against the latter in the previous session, as attention turned to who would be the next Fed chair.

President Donald Trump told reporters on Monday he is “very, very close” to making his decision on who should chair the Fed.

A less hawkish candidate would be expected to favour lower interest rates, reducing the value of the dollar and making the greenback-denominated metal cheaper for holders of other currencies.

The Fed will raise interest rates in December and twice next year, according to a Reuters poll of economists showed, who now worry that the central bank will slow its tightening because of expectations that inflation will remain low.

“I’m very surprised we’re up here. Risk is still on if you look at stock markets. Generally gold should be lower... I was expecting gold to drift down to $1,260 area,” said the Hong Kong-based trader.

“We’ll probably consolidate around $1,275-$1,285 until some Fed news comes out.”

Reuters technicals analyst Wang Tao, however, said spot gold may break a resistance at $1,283 per ounce and rise into a range of $1,289-$1,295.

In other precious metals, silver was up 0.2 percent to $17.08 an ounce after hitting its lowest since Oct. 9 in the previous session.

Platinum was up 0.6 percent at $926.10 an ounce and palladium rose 0.6 percent to $964.93 an ounce.

Reporting by Apeksha Nair in Bengaluru; Editing by Subhranshu Sahu and Sunil Nair