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PRECIOUS-Gold steady as Fed minutes keep dollar under pressure
May 25, 2017 / 3:59 AM / 7 months ago

PRECIOUS-Gold steady as Fed minutes keep dollar under pressure

    * Asian shares scale two-year highs after Fed minutes
    * Fed says prudent to confirm recent slowdown transitory
    * Spot gold seen retesting resistance at $1,264 per ounce-

 (Updates prices)
    By Vijaykumar Vedala
    May 25 (Reuters) - Gold held steady on Thursday to keep most
of its gains from the previous session, with the dollar slipping
after minutes of the U.S. Federal Reserve's last policy meeting
downplayed the chance of more aggressive interest rate hikes.
    The minutes showed policymakers agreed they should hold off
on raising interest rates until it was clear a recent U.S.
economic slowdown was temporary, although most said a hike was
coming soon.             
    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.
    Spot gold        was nearly flat at $1,257.90 per ounce by
0728 GMT. It rose about 0.6 percent on Wednesday. 
    U.S. gold futures         were up 0.4 percent at $1,258 an
    "I do not think the market's view for two more rate hikes
has changed following the release of the Fed meeting minutes," 
said Argonaut Securities analyst Helen Lau.
    "It was not a very strong view from the Federal Open Market
Committee and hence gold hasn't reacted," she added.  
    Federal funds futures implied traders stuck with an 83
percent chance the Fed would raise rates by a quarter point at
its June 13-14 meeting, according to CME Group's FedWatch
    "We think that the precious metal has weathered the prospect
of a Fed increase rather well," said INTL FCStone analyst Edward
    "We do see further strengthening ahead in light of what we
think will be continued dollar weakness emanating from more
Trump-related headaches emanating from Washington."
    Spot gold is expected to retest a resistance at $1,264 per
ounce, a break below which could lead to a gain to the next
resistance at $1,276, according to Reuters technical analyst
Wang Tao. 
    Gold prices were kept under check on Thursday as investors
shrugged off risk aversion and opted for equities, said Richard
Xu, a fund manager at China's biggest gold exchange-traded fund,
HuaAn Gold.
    Asian shares scaled two-year highs with MSCI's broadest
index of Asia-Pacific shares outside Japan                 
advancing 0.9 percent, hitting its highest level since June
    Meanwhile, the dollar index        that measures the
greenback against a basket of major currencies was down 0.3
    Among other precious metals, silver        was up 0.1
percent at $17.21 an ounce, while platinum        gained 0.4
percent to $948.10 an ounce. 
    Palladium        rose 0.8 percent to $769.18 an ounce.      
    On Wednesday, silver gained nearly 1 percent, while
palladium fell by as much.

 (Reporting by Vijaykumar Vedala in Bengaluru; Editing by
Richard Pullin and Subhranshu Sahu)

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