June 7, 2018 / 11:14 AM / 2 months ago

PRECIOUS-Gold gains on weak dollar as investors anticipate Fed meeting

    * Weaker dollar supports gold
    * Fed meets on June 12-13
    * Market awaits clues on U.S. rate rises
    * Silver breaks above 200-day moving average

 (Updates prices, headline; adds comment, second byline, NEW
YORK to dateline)
    By Renita D. Young and Peter Hobson
    NEW YORK/LONDON, June 7 (Reuters) - U.S. dollar weakness
helped boost gold prices on Thursday, but gains were limited as
the market awaited clues from next week's  meeting of the
Federal Reserve on the pace of U.S. interest rate rises. 
    Spot gold        rose 0.24 percent to $1,299.05 an ounce by
1:34 p.m. EDT (1734 GMT), earlier hitting a one-week high,
$1,303.08. U.S. gold futures         for August delivery settled
up $1.60, or 0.1 percent, at $1,303 per ounce. 
    "The rise in prices is due to the dollar," said Capital
Economics analyst Simona Gambarini.              
    A weaker dollar is good for gold because it makes the metal
cheaper for buyers using other currencies and can fuel demand. 
    However, Gambarini said investors were in wait-and-see mode
ahead of the Fed meeting on June 12-13, when they expect both a
rate rise and signals on the outlook for U.S. monetary policy.
    Higher U.S. interest rates tend to boost the dollar and also
push up bond yields, reducing the appeal of non-yielding
bullion.                 
    "Gold      steady and better again with more short covering
as we await six days to the next Fed meeting," said George Gero,
managing director of RBC Wealth Management. 
    "Notes and probable rate hikes       all priced in."
    Expectations that the Fed will hike interest rates several
times this year were fueled by U.S. data showing an unexpected
fall in applications for unemployment benefits.             
    Investors were anticipating a summit between the leaders of
the United States and North Korea on June 12 and a European
Central Bank (ECB) meeting on June 14.
    Both events could affect gold. 
    Tensions surrounding North Korea have supported gold,
increasing demand for an asset viewed as a safe place to invest
in times of geopolitical uncertainty.
    Markets are meanwhile betting the ECB will signal a winding
down of its vast bond-buying program, boosting the euro.
                                      
    On technicals, Commerzbank analysts said gold prices were
more likely to fall than to rise if it was unable to move above
its 200-day moving average around $1,308. 
    Fibonacci technical support was at $1,286, said analysts at
ScotiaMocatta.  
    Meanwhile, silver        gained 0.8 percent at $16.78 an
ounce after rising to its highest since April 23, $16.90.
    Silver broke above its 100-day moving average on Wednesday
and its 200-day moving average on Thursday, improving its
technical outlook and triggering buying. 
    Commerzbank said the moves higher suggest a recovery towards
$17.50-$17.74.    
    Platinum        lost 0.2 percent at $900.40 an ounce, while
palladium        dropped 0.2 percent at $1,014.50, earlier
reaching $1,029, its highest since April 23. 

 (Additional reporting by Karen Rodrigues in Bengaluru
Editing by David Evans and Diane Craft)
  
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