July 24, 2019 / 2:13 AM / a month ago

PRECIOUS-Gold gains on rate-cut hopes, Middle East tensions

July 24 (Reuters) - Gold prices edged higher on Wednesday, recovering from a one-week low touched in the previous session, on expectations of an interest rate cut by the U.S. Federal Reserve and escalating tensions in the Middle East.

FUNDAMENTALS

* Spot gold was up 0.2% at $1,420.40 per ounce as of 0128 GMT, after hitting its lowest since July 17 at $1,413.80 in the previous session.

* U.S. gold futures were steady at $1,420.80 an ounce.

* Futures remain 100% priced for a rate cut of 25 basis points (bps) by the Fed next week, and have even priced in an 18% chance of a 50 bp cut.

* The European Central Bank is expected to signal easier monetary policy at its meeting this week, while the Turkish central bank is expected to make a 250 bp cut on July 25.

* A U.S. Navy ship took defensive action against a second Iranian drone in the Strait of Hormuz last week, but did not see the drone go into the water, the U.S. military said on Tuesday.

* Meanwhile, the dollar index edged up to a five-week high on Wednesday, following gains of nearly 0.5% the previous day, while the euro slipped to a two-month low.

* U.S. Trade Representative Robert Lighthizer and senior U.S. officials will travel to Shanghai on Monday for face-to-face trade meetings with Chinese officials, Bloomberg reported on Tuesday, citing unnamed sources.

* Asian shares nudged higher on Wednesday amid hints of progress in the Sino-U.S. trade saga.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.25% from Monday to 823.13 tonnes on Tuesday.

DATA AHEAD

* 0800 EU Markit Mfg, Serv, Comp Flash PMIs July

* 1345 US Markit Mfg, Serv, Comp Flash PMIs July

* 1400 US New Home Sales-Units June (Reporting by Harshith Aranya in Bengaluru; Editing by Subhranshu Sahu)

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