(Reuters) - Gold prices edged up on Monday as expectations the U.S. Federal Reserve will be accommodative for the rest of the year weighed on the dollar though increased risk appetite limited bullion’s gains.
Spot gold was up 0.3 percent at $1,304.81 per ounce by 1031 GMT. U.S. gold futures gained 0.2 percent to $1,305. The Fed will begin its monetary policy meeting on Tuesday, which ends with a news conference on Wednesday.
“With lack of any other news, the inspiration (for gold) is coming from a softer dollar,” Saxo Bank analyst Ole Hansen said.
“The market is potentially setting up for some additional dovish comments from the FOMC this week. (But) the safe haven aspect has somewhat been challenged as the stock markets have continued to rise.”
Markets currently expect there will be no rate hikes this year, and are even building in bets for a rate cut in 2020.
The dollar index slid 0.2 percent, having posted its biggest weekly decline since early December last week.
Global stocks rose to their highest in five months as traders began to price in an accommodative stance from the U.S. central bank.
Data on Friday showed speculators reduced their net long positions in gold for a third straight week.
“There is no specific, significant driver for gold at the moment; it is likely to remain steady around the psychological $1,300 level going into the Fed meeting,” said Jigar Trivedi, commodities analyst at Mumbai-based, Anand Rathi Shares & Stock Brokers.
“Fundamentally, uncertainties surrounding trade tensions, U.S.-North Korea relations or Brexit have not really attracted significant investment demand in gold, evident from recent outflows from exchange traded funds.”
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.2 percent on Friday. Holdings are down 1.7 percent so far this month and 2.1 percent since the beginning of this year after rising nearly 5 percent in January.
“On the technical front, $1,275 is likely to remain a good support (for gold), while on the upside, $1,310 and beyond that, the $1,355-60 level are the resistance levels to watch out for,” Trivedi said.
Among other precious metals, palladium was down 0.1 percent at $1,559.25 per ounce, close to a record peak of $1,567.50 hit in the previous session. Silver gained 0.4 percent to $15.34 an ounce, while platinum rose 0.6 percent to $833.
Reporting by Nallur Sethuraman and Arpan Varghese in Bengaluru; editing by Emelia Sithole-Matarise
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