March 21, 2018 / 4:28 AM / a month ago

PRECIOUS-Gold gains on dollar decline as market awaits Fed rate outlook

    * Fed seen raising rates, 2018 rate hike projections in
focus
    * Gold down 4 pct from over 1-1/2-year high touched in Jan
    * Analysts see global political tensions supporting gold

 (Updates prices)
    By Eileen Soreng
    March 21 (Reuters) - Gold prices rose on Wednesday as the
dollar fell as investors await the outcome of the U.S. Federal
Reserve's meeting this week for signs of the pace of monetary
tightening, which could limit the demand for bullion going
forward. 
    Spot gold        was 0.4 percent higher at $1,315.84 per
ounce at 0746 GMT. Prices fell to a nearly three-week low of
$1,306.91 in the previous session.
    U.S. gold futures         for April delivery rose 0.27
percent to $1,315.40 per ounce.
    The dollar index       , which measures the greenback
against a basket of six major currencies, slipped 0.2 percent to
90.195 after climbing to 90.445 on Tuesday, its highest since
March 1.       
    With a 25 basis point interest rate hike seen as a done
deal, investors will be on the lookout for whether the Fed
forecasts four rate increases in 2018, instead of the median of
three hikes in December's quarterly forecast.
    "Dealers will be looking at forward guidance to determine
the dollar's prospects, and therefore that of gold," said
Alasdair Macleod, head of research with Toronto-based Goldmoney
Inc.
    The Fed will make an announcement on interest rates at 1800
GMT on Wednesday and new Fed Chairman Jerome Powell will hold
his first news conference at 1830 GMT.
    The expectations for a faster pace of U.S. rate hikes have
caused gold to fall 4 percent from a 1-1/2-year high reached in
January.
    Higher U.S. interest rates reduces demand for gold for
non-interest-bearing bullion.
    Heightened geo-political tensions, inflation concerns, trade
wars and runaway U.S. budget deficit spending should serve to
counteract the well-expected Fed rate hike and keep the floor on
gold prices intact, Stephen Innes, APAC trading head at OANDA
said.
    Holdings in the SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, holdings rose 1.26 percent,
their best one-day percentage rise since Jan. 18, to 850.84
tonnes on Monday. 
    SPDR holdings, however, fell 0.04 percent on Tuesday.
         
    U.S. President Donald Trump is expected to unveil up to $60
billion in import duties on Chinese goods by Friday. The move
comes after Trump imposed tariffs on imported steel and
aluminium earlier this month.             
    Investors are worried Trump's actions could escalate into a
trade war if China and other countries retaliate with similar or
harsher measures, threatening global growth.
    Among other precious metals, both spot silver        and
platinum        were up 0.5 percent, at $16.27 per ounce and
$944.90 per ounce, respectively.
    Palladium        rose 0.2 percent at $980.50 per ounce.

 (Reporting by Eileen Soreng and Nallur Sethuraman in Bengaluru,
Editing by Christian Schmollinger and Subhranshu Sahu)
  
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