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PRECIOUS-Gold steady; markets brace for Fed meeting
September 19, 2017 / 4:22 AM / 2 months ago

PRECIOUS-Gold steady; markets brace for Fed meeting

    * Spot gold may drop to $1,299/oz - technicals
    * Fed meeting in focus for clues on timing of rate hike

 (Recasts, updates prices)
    By Apeksha Nair
    Sept 19 (Reuters) - Gold steadied above a two-week low on
Tuesday, with investors awaiting direction from a Federal
Reserve meeting for clues on the pace of monetary policy
tightening in the United States. 
    Spot gold        was nearly unchanged at $1,307.28 per ounce
by 0711 GMT, after dropping to $1304.10, its lowest level since
Aug. 31 in the previous session.
    U.S. gold futures for December delivery         were flat
at$1,310.50 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 slipped on Tuesday, after touching a decade
high on the previous day, hobbled by uncertainty as traders
waited on the Fed meeting, due to begin later in the day, for
clues on U.S. monetary policy.            
    At the two-day Federal Open Market Committee meeting, the
U.S. central bank is widely expected to announce plans to trim
its balance sheet but hold off raising interest rates for now.
            
    The dollar on Tuesday eased against a basket of currencies
       but hovered near an eight-week high against the yen
       as U.S. 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 U.S. yield curve," said Jeffrey Halley, a senior
market analyst at OANDA.
    Meanwhile, ongoing rifts between the United States and North
Korea are likely to take centre stage at the U.N. General
Assembly meeting on Tuesday where President Donald Trump is set
to speak for the first time.
    The U.S. military staged bombing drills with South Korea
over the Korean peninsula, and Russia and China began naval
exercises ahead of the U.N. 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 technicals analyst Wang Tao.
              
    In other precious metals, silver        and platinum       
were both 0.5 percent lower at $17.13 and $954.99 an ounce,
while palladium        lost 0.6 percent at $930.13.

  

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