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Business News/ Market / Stock-market-news/  Gold prices edge up as dollar eases, markets brace for Fed meeting
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Gold prices edge up as dollar eases, markets brace for Fed meeting

Gold prices inches up from its lowest in over two weeks as the dollar shed some gains, while the market focuses on two-day Federal Reserve meeting

Spot gold was up 0.2% at $1,308.80 an ounce by 9.34am, after dropping to its lowest level since 31 August in the previous session. Photo: ReutersPremium
Spot gold was up 0.2% at $1,308.80 an ounce by 9.34am, after dropping to its lowest level since 31 August in the previous session. Photo: Reuters

Gold prices inched up from its lowest in over two weeks on Tuesday as the dollar shed some gains, while the market’s focus turned to a two-day Federal Reserve meeting that kicks off later in the day.

Spot gold was up 0.2% at $1,308.80 an ounce by 9.34am, after dropping to its lowest level since 31 August in the previous session. US gold futures for December delivery edged up 0.1% to $1,312.20 an ounce.

“Even though gold still seems to be in a bullish trend, I think we’ll probably test $1,300 first and then you’ll see fresh speculative buying coming back in," a Hong-Kong based trader said. “Overall risk-on sentiment and the dollar strength seem to be driving gold lower. Generally, people are not buying into gold because stock markets are higher."

Asian shares wavered on Tuesday, after touching a decade high on the previous day, hobbled by uncertainty as traders waited on the Fed meeting for clues on US monetary policy. At the Federal Open Market Committee meeting, the US central bank is widely expected to announce plans to trim its balance sheet but hold off raising interest rates for now.

The dollar eased 0.1% versus the yen on Tuesday, but hovered near an eight-week high, supported as US treasury yields continued to climb after signs of firming inflation.

Markets will also be watching for clues on the timing of the Fed’s next interest rate hike as these tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion. “In all likelihood, gold will remain under some selling pressure into tomorrow’s FOMC and will be particularly sensitive to moves on the US yield curve," said Jeffrey Halley, a senior market analyst at OANDA.

Meanwhile, ongoing rifts between the US and North Korea are likely to take centre stage at the UN General Assembly meeting on Tuesday where President Donald Trump is set to speak for the first time. The US military staged bombing drills with South Korea over the Korean peninsula and Russia and China began naval exercises ahead of the UN meeting where North Korea’s nuclear threat is likely to loom large.

Spot gold may drop to $1,299 per ounce, as it has broken a support at $1,309, said Reuters technical analyst Wang Tao. In other precious metals, silver was down 0.4%% at $17.14 an ounce. Platinum fell 0.3% to $956.45 an ounce, while palladium lost 0.4% at $932.02. Reuters

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Published: 19 Sep 2017, 10:46 AM IST
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