December 13, 2017 / 5:14 AM / a year ago

PRECIOUS-Gold holds near 5-month low ahead of Fed meeting outcome

    * Investors await Fed rate decision, 2018 outlook
    * U.S. stock futures, dollar fall as Democrat wins Alabama
race
    * Spot gold may rebound to $1,250 resistance level
-technicals

 (Adds comment, updates prices)
    By Apeksha Nair
    Dec 13 (Reuters) - Gold steadied near its weakest level in
almost five months on Wednesday amid expectations the Federal
Reserve would raise interest rates again at the conclusion of
its last policy meeting this year.
    The Fed has increased rates twice in 2017 and is still
expected to push through three more hikes next year.
            
    Spot gold        was down 0.1 percent at $1,242.18 an ounce
at 0755 GMT. That was not far above Tuesday's trough of
$1,235.92, which was gold's lowest level since July 20.    
    U.S. gold futures         were up 0.2 percent at $1,243.90
an ounce.
    U.S. stock futures, Treasury yields and the dollar fell as
Democrat Doug Jones beat Republican Roy Moore in a bitter U.S.
Senate race in Alabama, dealing a political blow to Trump in a
race marked by accusations of sexual misconduct against Moore.
                            
    The win by Jones could be bullish for gold and bearish for
the dollar, a Hong Kong-based trader said, adding that the
recent dollar strength could lead to some profit-taking on the
greenback, in turn helping gold. 
    Strong U.S. producer price data had helped lift the dollar
to a four-week high on Tuesday, suggesting improving inflation
ahead of the outcome of the Fed meeting on Wednesday.             
    "It's just consolidating here at the moment until the
Federal Open Market Committee statement is out. We're expecting
a rate hike," the trader said, on gold's behavior in Asian
trading. 
    Investors will also be focused on the U.S. central bank's
statement for clues on further rate increases in 2018.
    Higher U.S. rates tend to boost the dollar, making
greenback-denominated gold more expensive for holders of other
currencies. 
    "If the Fed comes out of the gate with more hawkish views on
the economy and see inflation improving, it could impact the
dollar index. Any further strength in the dollar index would
push the gold price lower," said Naeem Aslam, London-based chief
market analyst at Think Markets.
    Reuters technicals analyst Wang Tao said spot gold may
bounce towards $1,250 before falling again, as it has stabilised
around the support level of $1,239.             
    In other precious metals, silver        fell 0.3 percent at
$15.67 an ounce, trading close to a five-month low of $15.61 hit
overnight. 
    Platinum        was unchanged at $876.30 an ounce, after
touching its lowest since February 2016 at $868.80 on Tuesday.  
 Palladium        was little changed at $1,012.

 (Reporting by Apeksha Nair in BENGALURU; Editing by Tom Hogue
and Manolo Serapio Jr.)
  
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