May 2, 2018 / 4:50 AM / 5 months ago

PRECIOUS-Gold claws back from 4-month low; investors await Fed

    * Fed widely expected to keep interest rates steady
    * Firm dollar likely to cap upside for gold -traders
    * Spot gold could retest support at $1,302/oz -technicals

 (Adds comment, updates prices)
    By Eileen Soreng
    BENGALURU, May 2(Reuters) - Gold prices rose on Wednesday,
ticking up from a four-month low hit in the previous session, as
Chinese buyers returned to the market following the Labour Day
holiday, while investors waited for cues on U.S. monetary policy
from a two-day Federal Reserve meeting.
    Spot gold        was up 0.5 percent at $1,309.71 per ounce
at 0653 GMT. Gold fell to $1,301.51 in the previous session, its
lowest since Dec. 29, 2017.
    U.S. gold futures         for June delivery rose 0.31
percent to $1,310.80 per ounce on Wednesday.
    "The Chinese are back from a long holiday and we're seeing 
some buying interest on the downside," said Peter Fung, head of
dealing at Wing Fung Precious Metals.
    But gains should be limited as the dollar is firm and as
people are waiting for U.S. non-farm payroll data, added Fung. 
    The dollar index        was down about 0.1 percent at
92.357, but the greenback hovered close to a near four-month
high of 92.566, supported by the outlook for a strong U.S.
economy and rising yields amid signs of slowdown elsewhere,
especially in Europe.       
    While the Fed is widely expected to keep interest rates on
hold at its policy meeting ending on Wednesday, the central bank
will likely encourage expectations that it will lift borrowing
costs in June on the back of rising inflation and low
unemployment. The Fed is due to announce its decision at 2 p.m.
EDT (1800 GMT).             
    Investors are also focused on the April U.S. non-farm
payrolls report due on Friday, which could provide further signs
of economic strength.
    Inflation is sometimes regarded as gold-positive, because
bullion is seen as a safe-haven when price pressures rise, but
higher interest rates imposed to fight inflation make the
non-yielding metal less attractive.
    Spot gold may end its current bounce below resistance at
$1,317 per ounce and then retest support at $1,302, as suggested
by a Fibonacci ratio analysis, according to Reuters technical
analyst Wang Tao.             
    Meanwhile, holdings of SPDR Gold Trust      , the world's
largest gold-backed exchange-traded fund, fell 0.51 percent to
866.77 tonnes on Tuesday.             
    Among other precious metals, spot silver        rose 1.3
percent to $16.32 per ounce. Prices touched a more than
four-month low of $16.04 in the previous session.
    Platinum        was up 0.9 percent at $898.05 per ounce. The
metal touched its lowest this year at $888.50 on Tuesday.
    Palladium        climbed 0.5 percent to $953.30 per ounce. 

 (Reporting by Eileen Soreng in Bengaluru; Editing by Subhranshu
Sahu and Joseph Radford)
  
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