June 13, 2018 / 10:48 AM / 9 days ago

PRECIOUS-Gold eases ahead of expected U.S. rate rise

    * Fed statement due at 1800 GMT
    * Rate rise priced in, focus on policy outlook 
    * European and Japanese central banks have meetings later in
week
    * Technicals suggest gold prices will fall

 (Updates throughout, moves dateline from BENGALURU)
    By Peter Hobson
    LONDON, June 13 (Reuters) - Gold edged lower on Wednesday,
pressured by a slightly stronger dollar, but activity was muted
ahead of a Federal Reserve policy announcement that could
trigger a sharp move in prices. 
    Investors expect the Fed to raise interest rates but want to
know if it intends to tighten policy four times in 2018 or three
times, as it indicated earlier this year. 
    A clear hint in the announcement at 1800 GMT could knock
gold out of the tight range of about $1,290 to $1,305, in which
it has been trapped since mid-May.
    More rate rises would hurt gold because they push up bond
yields, making non-yielding bullion a less attractive
investment, and tend to strengthen the dollar, increasing the
cost of gold for buyers using other currencies.
    Gold prices have tended to fall before recent U.S. interest
rate rises, as investors anticipate the change, but rally
afterwards. 
    "It might be different this time," said Robin Bhar, head of
metals research at Societe Generale. "Forward guidance will be
crucial ... That will dictate direction in the short term."
    Spot gold        was down 0.1 percent at $1,294.70 an ounce
at 1030 GMT. U.S. gold futures         for August delivery also
dipped by 0.1 percent, slipping to $1,298.10. 
    Reinforcing the cautious mood were policy announcements
expected from the European Central Bank (ECB) on Thursday and
Japan's central bank on Friday, which could affect gold prices.
    The ECB is expected to signal a wind-down of its huge
bond-buying programme, which could strengthen the euro and boost
gold demand in Europe. 
    Holdings of gold by exchange-traded funds (ETFs) tracked by
Reuters                 have decreased by 1.4 million ounces, or
2.4 percent, since late May, while bets on higher prices on the
Comex exchange               remain low after falling last month
to the fewest since January 2016. 
    Reuters technical analyst Wang Tao said gold had to break
from its trading range, which has been gradually tightening, and
is likely to drop towards $1,263-$1,278 an ounce.             
    Fibonacci technical support was at $1,286, with resistance
at $1,301.40, said ScotiaMocatta analysts. Gold is likely to
fall unless it moves back above the 200-day moving average
around $1,307, they said. 
    In other precious metals, silver        was up 0.1 percent
at $16.88 an ounce after hitting a seven-week high of $16.95 on
Tuesday.
    Platinum        was flat at $894.20 and palladium       
dropped 0.7 percent to $1,011.
    
    

    
 (Additional reporting by Karen Rodrigues and Swati Verma in
Bengaluru
Editing by David Goodman)
  
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