* Two-day Fed meeting ends on Wednesday
* Traders stop pricing in negative interest rates
* SPDR gold holdings dipped Friday
* Specs cut bullish positions in COMEX gold in week to June 2 (Updates prices)
By Shreyansi Singh
June 8 (Reuters) - Gold rose on Monday after the previous session’s steep fall, boosted by hopes of dovish monetary policy from the U.S. Federal Reserve.
Spot gold rose 0.7% to $1,696.79 per ounce by 1:53 p.m. EDT (1753 GMT). U.S. gold futures settled up 1.3% at $1,705.1.
“The Fed will continue to have uber dovish policies, they will continue to suppress real rates and that’s the main driver for gold purchases over the last few months,” said Daniel Ghali, commodity strategist at TD Securities, adding that the macro implications will continue to support gold.
Bullion fell as much as 2.4% to $1,670.14 on Friday, its lowest in over a month, after an unexpected rise in U.S. employment increased hopes for a swift recovery in the global economy and boosted investor appetite for riskier assets.
Gold’s uptick was also technical in nature, Saxo Bank analyst Ole Hansen said.
“The break below $1,700 on Friday is once again attracting some demand from investors, who have been waiting on the sidelines for a correction.”
Market participants are now waiting for the U.S. central bank’s two-day policy meeting, which ends on Wednesday, but have stopped pricing in the possibility of negative interest rates after Friday’s jobs report.
Gold tends to gain when interest rates are low, which reduces the opportunity cost of holding non-yielding bullion. Gold is also seen as a hedge against inflation.
Holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, dipped 0.4% on Friday. Speculators also cut their bullish positions in COMEX gold in the week to June 2.
In other precious metals trading, spot silver rose 1.6% to $17.65 an ounce, platinum fell 0.42% to $832.51 per ounce and palladium jumped 2.7% to $2,005.61. (Reporting by Shreyansi Singh in Bengaluru; Editing by Dan Grebler and Tom Brown)