PRECIOUS-Gold edges up on weaker stocks, dollar ahead of Fed meeting

By Reuters Editorial / June 12, 2017 / / Article Link

* Fed meeting starts on Tuesday* Focus on pace of Fed rate hikes (updates prices, adds quote)By Nithin ThomasPrasadBENGALURU, June 12 Gold inched up on Monday asAsian stocks fell and the dollar eased ahead of a U.S. FederalReserve policy meeting that could give clues on the pace ofinterest rate hikes over the rest of the year.With the Fed widely expected to raise interest rates at itstwo-day meeting that ends on Wednesday, the focus will be on anyfresh hints on the pace of further tightening in the months tocome and next year, and any further details on its plans fortrimming its balance sheet.The focus is on whether the Fed is looking at three or fourrate hikes this year, according to Argonaut Securities analystHelen Lau.Higher interest rates tend to boost the dollar and bondyields, putting pressure on gold prices by increasing theopportunity cost of holding non-yielding bullion. "With the UK event risk successfully negotiated, it wouldappear the market is putting more emphasis on this week's FOMC(Federal Open Market Committee) rate hike," said Jeffrey Halley,a senior market analyst with OANDA, adding that markets hadpriced in an almost 100 percent chance the Fed would lift rates.The market is also anxious to see if the Fed becomes moredovish in its outlook, he said.Spot goldwas up 0.1 percent at $1,266.90 an ounce asof 0813 GMT, after shedding 1 percent in its biggest one-daypercentage decline since May 18 in the previous sessionU.S. gold futures for August delivery fell 0.2percent to $1,269 an ounce.In the wider markets, Asian stocks edged lower in earlytrade on Monday following a slide by U.S. technology shares.The dollar index against a basket of currencies dipped 0.1percent to 97.135following its rise to a nine-day highof 97.500 on Friday.Among other metals, spot palladiumwas up 0.2 percentat $892.50 per ounce after rising to a high of $911.50 an ounce,just below a 16-year high hit on Friday."The palladium market is experiencing a short-squeeze whichwe believe is driven by investment demand rather than industrialdemand," Julius Baer analyst Carsten Menke said in a note."Eventually, the weaker demand backdrop from automotivecatalysts should be reflected in deteriorating sentiment andfalling prices. We remain bearish and stick to ourshort-recommendation." Silverwas down 0.1 percent at $17.15 per ounce,while platinumrose 1.1 percent to $943.30 per ounce. (Reporting by Nithin Prasad in Bengaluru; Editing by JosephRadford and Subhranshu Sahu)