November 16, 2017 / 1:28 AM / 8 months ago

Gold inches down as U.S. rate hike looms

(Reuters) - Gold edged lower on Thursday as upbeat U.S. economic data bolstered the possibility of the Federal Reserve raising interest rates next month and beyond.

A 1000 gram gold bar is seen at the Kazakhstan's National Bank vault in Almaty, Kazakhstan September 15, 2017. REUTERS/Mariya Gordeyeva

Spot gold was down 0.1 percent at $1,276.95 per ounce at 0746 GMT, slipping from Wednesday’s 3-1/2-week high of $1,289.09.

U.S. gold futures for December delivery dipped 0.1 percent to $1,276.70.

Gold has traded within a tight range of about $24 for the month of November.

“It is a combination of Fed rate hike (expectations) and equity market volatility. There are increasing risks in the market now,” said Argonaut Securities analyst Helen Lau.

“Views around these two countering forces could keep gold flat in the short term,” she added.

Underlying U.S. consumer prices increased in October, strengthening the view that a recent disinflationary trend worrying the Fed probably had ended.

Falling unemployment and sustained growth mean the U.S. economy has accelerated beyond a sustainable level so the Fed should continue to raise interest rates, including next month, veteran Fed policymaker Eric Rosengren said on Wednesday.

Another Fed policymaker, Charles Evans, said he will go with an open mind into next month’s policy meeting, at which the U.S. central bank is expected to raise interest rates for a third time this year.

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 bullion.

Spot gold remains neutral in a range of $1,270-$1,286 per ounce, and a break of that trading band could suggest a change in direction, according to Reuters technical analyst Wang Tao.

“It is perhaps best to remain sidelined for now, as the gold complex seems to be trapped within a relatively tight trading range and has yet to assert a meaningful direction,” INTL FCStone analyst Edward Meir said in a note.

Asian shares rose on Thursday, shrugging off losses on Wall Street, and the dollar edged up as investors priced in more U.S. rate hikes.

In other precious metals, palladium was up 0.2 percent at $986.30 an ounce, after touching a two-week low on Wednesday.

Silver gained 0.1 percent at $16.99 per ounce and platinum eased 0.1 percent to $930.70.

Reporting by Vijaykumar Vedala in Bengaluru; Editing by Richard Pullin and Manolo Serapio Jr.

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