Gold steadies on the face of awaited FOMC statement

By Karthika Suresh Namboothiri and Diptendu Lahiri (Reuters) - Gold prices steadied on Wednesday as investors awaited the U.S.

Reuters June 20, 2019 00:05:58 IST
Gold steadies on the face of awaited FOMC statement

Gold steadies on the face of awaited FOMC statement

By Karthika Suresh Namboothiri and Diptendu Lahiri

(Reuters) - Gold prices steadied on Wednesday as investors awaited the U.S. Federal Reserve's statement later in the session for cues on its interest rate outlook.

Spot gold was little changed at $1,346.03 per ounce at 12:57 p.m. EDT (1657 GMT). U.S. gold futures fell 0.1% to $1,349.70 per ounce.

"The market might become a little cautious just ahead of the meeting and gold investors might take a neutral position then," said Suki Cooper, precious metals analyst at Standard Chartered Bank.

The Fed monetary policy statement scheduled for release at 2 p.m. EDT (1800 GMT) will be followed by a news conference by Chairman Jerome Powell. Futures markets have almost fully priced in a quarter-point easing in July and imply more than 60 basis points of cuts by Christmas.

"People are optimistic about Fed cutting rates twice, once in July and once in December," Cooper said.

Gold touched a 14-month peak of $1,358.04 an ounce on Friday, and has gained more than 6% since touching a 2019 low of $1,265.85 in early May.

"A major driver of the gold price rally since 4Q18 has been the Fed's pivot from expecting rate hikes to expecting cuts. ... We expect market participants to be disappointed by the Fed's press conference on Wednesday. This would pressure gold prices," Societe Generale said in a note.

The U.S. central bank is not alone in contemplating rate cuts. European Central Bank President Mario Draghi hinted on Tuesday that if inflation failed to pick up, more policy easing could be on its way.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

Also weighing on prices was fresh optimism on the U.S.-China trade war front. China said earlier in the session that positive outcomes were possible in trade negotiations with Washington, after the presidents of the world's two largest economies agreed to revive their troubled talks at a G20 meeting later this month.

The drawn-out trade tussle between the world's two biggest economies has toppled global markets since its inception and raised concerns of an economic recession.

"We think the recent rally in gold rally has been as a result of combination of two things, the trade issues and central banks cutting rates. I don’t think these two have factored in completely yet," Cooper added.

Amongst other precious metals, silver was down 0.2% to $14.97, while platinum was unchanged at $806.93.

Palladium gained 1.3% to $1,499.35 per ounce, having hit its highest since March 27 at $1,502.02 earlier in the session.

(Reporting by Karthika Suresh Namboothiri and Diptendu Lahiri in Bengaluru; editing by Jonathan Oatis)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.