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PRECIOUS-Gold stays firm, Fed policy minutes in focus
May 24, 2017 / 4:52 AM / 7 months ago

PRECIOUS-Gold stays firm, Fed policy minutes in focus

    * U.S. Fed to release minutes of May 2-3 meeting at 2 pm ET
later in the session
    * Spot gold seen testing support at $1,245 per ounce:
technicals

 (Updates prices)
    By Vijaykumar Vedala
    May 24 (Reuters) - Gold held steady on Wednesday, after
slipping in the previous session, as investors awaited cues on
the U.S. Federal Reserve's rate hike stance from the minutes of
its last meeting due later in the day.
    Federal funds futures suggested traders saw about a 79
percent chance that the U.S. central bank would raise key
short-term rates by a quarter point to 1.00-1.25 percent at its
June 13-14 policy meeting              , little changed from
Monday's close, CME Group's FedWatch program showed.
            
    Spot gold        was little changed at $1,250.52 per ounce,
as of 0801 GMT. 
    U.S. gold futures         shed up to 0.4 percent to
$1,250.20 an ounce.
    "My expectations are that the pace of interest rate hikes
will be kept steady and stable regardless of the short-term
fluctuations in the U.S. economic data," said Mark To, head of
research at Hong Kong's Wing Fung Financial Group. 
    Higher interest rates 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.  
    A U.S. interest rate hike next month is a "distinct
possibility," the head of the Federal Reserve Bank of
Philadelphia Patrick Harker said.              
    Meanwhile, Minneapolis Federal Reserve Bank President Neel
Kashkari said while the U.S. economy is closer now than it was
in March to full employment, he still does not know "if we are
there yet."               
    "Gold could face more pain if tonight's FOMC (Federal Open
Market Committee) minutes shows that the Fed is on course for
two to three more rate hikes this year," said Jeffrey Halley, a
senior market analyst at OANDA. 
    "Any combination of the above is most likely bullish for the
U.S. dollar, especially as post a June hike, the market has not
priced this possibility in on its forward indicators."
    Spot gold is expected to test a support at $1,245 per ounce,
a break below which could cause a loss to the next support at
$1,233, according to Reuters technical analyst Wang Tao.
            
    Yellow metal prices rose 3 percent since hitting a near-two
month low of $1,213.81 on May 9, primarily supported by the
political turmoil in the U.S. due to controversies surrounding
President Donald Trump that brought the dollar under pressure.  
  
    Meanwhile, silver        slipped 0.2 percent to $16.99 an
ounce, platinum        shed 0.2 percent to $938.24 an ounce. 
    In the previous session, silver hit its highest in over
three weeks at $17.30, and platinum hit its loftiest in nearly a
month.
    Palladium        was nearly flat at $770.75 per ounce.  

 (Reporting by Vijaykumar Vedala in Bengaluru; Editing by Sonali
Paul and Sherry Jacob-Phillips)
  

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