March 20, 2018 / 4:14 AM / a month ago

PRECIOUS-Gold inches lower on firmer dollar ahead of Fed meet

    * Fed expected to signal faster increases in U.S. rates
    * SPDR Gold holdings rise 1.26 pct on Monday

 (Adds quotes, updates with latest prices)
    By Nithin ThomasPrasad
    March 20 (Reuters) - Gold edged lower on Tuesday as the
dollar firmed while traders waited to gauge the path of U.S.
monetary policy for the rest of the year from the two-day
Federal Reserve meeting that kicks off later in the day. 
    Spot gold        was down 0.1 percent to $1,314.98 per ounce
at 0758 GMT. In the previous session, it touched $1,307.51 an
ounce, its lowest since March 1.
    U.S. gold futures         for April delivery dropped 0.2
percent to $1,314.70 per ounce.
    The dollar rose 0.4 percent to 106.55 yen        inching
away from a 16-month low of 105.24 yen set early March.       
    "Gold is trading in a relatively narrow range leading into
the Fed meeting, continuing a period of extremely low volatility
for the precious metal," said Jordan Eliseo, chief economist at
gold trader ABC Bullion.
    Prices for the yellow metal have not dipped below the $1,300
an-ounce level since the beginning of the year and have been
trading in a $23 range since March 8. 
    "A rate hike is priced in, so the bigger question for the
market is the Fed's outlook for monetary policy across the rest
of the year, and how much more tightening we will see." 
    Powell is expected to hike interest rates and signal three
more increases this year. 
    Though a rate hike today has been factored into the current
price, uncertainty remains as to how further tariffs in the
United States will impact global trade, said Cameron Alexander,
an analyst with Thomson Reuters-owned metals consultancy GFMS.
    A hike of more than 25 basis points would push prices lower,
while a significant reaction from China and European countries
on (U.S.) tariffs would drive prices higher, said Alexander.
    Higher interest rates tend to boost the U.S. dollar and push
bond yields up, pressuring gold prices by increasing the
opportunity cost of holding non-yielding bullion, while
political and financial uncertainty push up safe-haven demand
for the yellow metal. 
    Holdings at the SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, holdings rose 1.26 percent,
their best one-day percentage rise since Jan. 18, to 850.84
tonnes on Monday from 840.22 tonnes on Friday.          
    Among other precious metals, silver        slipped 0.1
percent to $16.29 per ounce after matching Friday's three-month
low in the previous session.    
    Platinum        fell 0.4 percent to $949.49 per ounce after
hitting its lowest since Jan. 3 on Monday. Palladium        rose
0.4 percent to $993.60 per ounce. 

 (Reporting by Nithin Prasad and Eileen Soreng in Bengaluru;
Editing by Joseph Radford and Sherry Jacob-Phillips)
  
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