May 2, 2019 / 10:48 AM / 3 months ago

PRECIOUS-Gold falls to 1-week low after Fed dashes rate cut hopes

* Federal Reserve holds interest rates steady

* Platinum touches lowest in a month

* Silver hovers close to a more than four month low

* Markets eye U.S. non-farm payrolls data on Friday (Updates prices)

By K. Sathya Narayanan

May 2 (Reuters) - Gold fell to its lowest in a week on Thursday, as the U.S. Federal Open Market Committee (FOMC) doused expectations of a near-term rate cut and on lack of physical demand in Asia.

Spot gold was down 0.5 percent to $1,270.49 per ounce as of 1202 GMT. It fell to $1,269.69, its lowest since April 24, earlier in the session.

U.S. gold futures fell 0.9 percent to $1,272.70 an ounce.

“The (gold) market is under pressure after a lack of follow through on the upside as prices could not break above $1,290 after several attempts and there was nothing important out of the FOMC,” said Afshin Nabavi, senior vice president at MKS SA.

In line with the expectations of most market participants, the Fed left benchmark interest rates unchanged on Wednesday.

However, investors were taken by surprise when the U.S. central bank emphasised it saw no compelling reason to consider a rate cut any time soon, citing rising employment and economic growth.

Higher interest rates increase the opportunity cost of holding non-yielding bullion and can boost the U.S. dollar, making gold costlier for investors holding other currencies.

“Also, the Far East market is pretty much closed with Japan and China almost gone for the whole week and we are not seeing a lot of demand from that part of the world,” Nabavi added.

The two major centres are shut for holidays. Trading in China will resume on Monday and in Japan on Tuesday.

Gold fell about 0.5 percent in the previous session, its biggest one-day percentage decline since April 16, after the Fed’s statement boosted the dollar and U.S. treasury yields.

The dollar on Thursday was down about 0.1 percent against its main rivals.

“Gold is under pressure again, despite the dollar actually paring gains, which could be some insight into traders’ mentality,” OANDA Senior Market Analyst Craig Erlam said in a note.

“Gold was threatening to potentially make a comeback but price action over the last 24 hours hasn’t given bulls much cause for optimism, which looks to have taken its toll.”

Investors are keeping a close eye on U.S. non-farm payrolls data due on Friday.

Silver was down 0.1 percent at $14.66 an ounce, holding close to a more than four-month low touched on Wednesday.

Platinum slipped 0.9 percent to $856.34, after touching its lowest in a month. Palladium gained 0.1 percent to $1,353.60, having touched its lowest since Jan. 25 at $1,309.67 in the previous session. (Reporting by K. Sathya Narayanan and Nallur Sethuraman in Bengaluru; Editing by Jason Neely and Mark Potter)

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