Gold holds steady as investors await Fed rate cut decision
* Silver, Palladium rises more than 1%
* SPDR Gold holdings rise 0.7% on Friday
By K. Sathya Narayanan
July 22 (Reuters) - Gold prices steadied on Monday, after a
sharp fall in the previous session, as investors waited for the
U.S. Federal Reserve's decision on interest rates at its
month-end meeting next week.
Spot gold was up 0.1% at $1,426.44 per ounce as of
1:44 p.m. EDT (1744 GMT). The metal touched its highest since
May 2013 at $1,452.60 on Friday, but closed about 1.5% lower.
U.S. gold futures settled mostly unchanged at
"Gold, for most parts, is steady as we are on hold until we
get to the Fed meeting. A lot of the move up (in the last week)
formed a consolidation pattern," Edward Moya, a senior market
analyst at OANDA said.
"Most people feel there is going to be a 25-basis-point cut,
but there is a growing camp that believes we could see a net
50-basis-point cut, which means uncertainty is high and it is
going to be difficult to see gold break out until past that
Lower interest rates reduce the opportunity cost of holding
non-yielding bullion and weigh on the dollar.
The Fed is expected to announce its decision at its July
30-31 meeting. Markets also expect a dovish policy stance from
the European Central Bank when it meets on Thursday.
The likelihood of a 50-basis-point cut soared last week
after dovish comments by Fed policymakers. Those expectations
later dwindled after an official clarified that the remarks did
not refer to potential policy actions.
U.S. rates futures implied traders positioned for a 72%
chance the Fed may lower its rate by a quarter point at its July
policy meeting, according to CME Group's FedWatch tool.
Political tensions in the Middle East were also offering
underlying support for bullion, a safe-haven asset, analysts
Britain was weighing its next moves in a Gulf tanker crisis
on Sunday, with few good options apparent as a recording emerged
showing that the Iranian military defied a British warship when
it boarded and seized a ship three days ago.
Reflective of sentiment in gold, holdings of SPDR Gold Trust
, the world's largest gold-backed exchange-traded fund,
rose 0.7 percent to 820.49 tonnes on Friday.
Speculators raised their bullish stance in gold and silver
in the week to July 16.
Silver rose 1.1% to $16.39 an ounce, after touching
its highest level in more than a year in the previous session.
"After rising from below $15 to over $16.50 in just two and
a half weeks, we would not be surprised if some market
participants were to take profits, thereby prompting a price
correction," Commerzbank analysts said in a note.
Platinum rose 0.7% to $849.28 and palladium
rose 1.4% to $1,526.50.
(Reporting by K. Sathya Narayanan in Bengaluru
Editing by Jonathan Oatis and Chizu Nomiyama)
First Published: 2019-07-22 03:40:37
Updated 2019-07-22 20:02:27
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