November 1, 2017 / 10:51 AM / in a year

PRECIOUS-Gold climbs ahead of Fed statement on pick for Yellen replacement

    * Fed statement expected on Wednesday at 2 p.m. EDT
    * Gold's move higher accelerates on break of 100-day ma
    * GRAPHIC-2017 asset returns:

 (Updates throughout, adds LONDON dateline)
    By Jan Harvey
    LONDON, Nov 1 (Reuters) - Gold climbed briefly back above
$1,280 an ounce on Wednesday as caution ahead of this week's
confirmation of the new Federal Reserve chair and a policy
statement from the bank prompted some to close out bets on
falling prices.
    Fed Governor Jerome Powell is widely tipped to take over
from incumbent Janet Yellen at the head of the U.S. central bank
next year. He is seen as a less hawkish and therefore more gold
friendly choice than his main challenger John Taylor, a Stanford
University economist.    
    A statement at the end of the Fed's latest policy meeting
due later will also be closely watched for clues on the outlook
for U.S. interest rates. While the bank is expected to leave
rates unchanged, investors will be watching for any indications
that it will press ahead with another increase next month.
    Spot gold        was up 0.5 percent at $1,278.11 an ounce at
1035 GMT, having earlier peaked at $1,280.87. Its upward move
accelerated after it broke through its 100-day moving average at
$1,275 an ounce, a key chart level.
    The metal has fallen for the last two weeks as the dollar
has strengthened, taking it to a three-week low on Friday. While
prices have recovered, they remain within a less than $15 an
ounce range so far this week as traders await clarity on U.S.
monetary policy.
    "Coming closer to the end of the year and having two FOMC
meetings in a month and half, which could determine the
direction of monetary policy, is what has been keeping gold
rangebound," Capital Economics analyst Simona Gambarini said.
    Gold is highly sensitive to rising U.S. interest rates, as
these lift the opportunity cost of holding non-yielding bullion,
while boosting the dollar, in which it is priced.
    Upbeat earnings reports helped drive global stock markets to
the latest in a recent string of record highs on Wednesday,
while the dollar steadied against a basket of major currencies
ahead of the Fed decision. Oil prices jumped 1 percent.
    U.S. gold futures        for December delivery were up $9.20
an ounce at $1,279.70.
    Elsewhere silver        was up 1.5 percent at $16.94 an
ounce, while platinum        was 1.4 percent higher at $927.60
an ounce. Palladium        was up 1.2 percent at $991.72 an
ounce, off an earlier more than two-week high at $995.90.
    The metal rose nearly 5 percent in October and touched a
16-year peak of $1,010.50 an ounce mid-month. 
    "While we still see prices detached from fundamentally
justified levels, we also believe risks are skewed to the
upside," Julius Baer said in a note on Wednesday. "Hence it is
not yet the right time to short the market although we remain
convinced about a looming correction."

 (Additional reporting by Vijaykumar Vedala in Bengaluru;
Editing by Elaine Hardcastle)
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