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PRECIOUS-Gold firm as dollar dips after U.S. election, Fed in focus

Published 2018-11-07, 12:15 p/m
© Reuters.  PRECIOUS-Gold firm as dollar dips after U.S. election, Fed in focus
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(Updates prices)

* Dollar index falls 0.4 pct

* Democrats will control U.S. House for first time in eight years

* Platinum hits more than 4-month high

By Sumita Layek

BENGALURU, Nov 7 (Reuters) - Gold pared some gains on Wednesday but held firm as the dollar slid after the U.S. midterm elections delivered a split Congress and as investors looked ahead to a Federal Reserve meeting for signals on future interest rate hikes.

Spot gold XAU= was up 0.1 percent at $1,227.96 per ounce at 11:47 a.m. EST (1647 GMT), having earlier hit a high of $1,235.83, while U.S. gold futures GCcv1 rose 0.2 percent to $1,228.90.

"The split government is unlikely to impact gold much. Gold has been rather inured to geopolitical developments this year ... The biggest driver for gold remains the US Dollar and its reaction has been reasonable given the dip in the dollar," said Tai Wong, head of metals trading at BMO.

The dollar index .DXY fell, making bullion more attractive for holders of other currencies as a split Congress dampened expectations for a major fiscal policy boost to the economy. USD/ MKTS/GLOB

"Gold seems happy in a $1,215-45 range for now as we await the next real change in the trade chessboard," Wong said.

Investors have largely opted for the safety of the greenback rather than gold, a traditional safe haven, this year as a U.S.- China trade row continues.

Democrats won control of the U.S. House of Representatives, giving them the opportunity to block President Donald Trump's push for a further round of tax cuts and deregulation - measures that have boosted the U.S. economy, stock markets and the dollar, and have kept the Fed on a policy-tightening path. participants are now keeping a close eye on a two-day Fed meeting set to begin on Wednesday to gauge the outlook for U.S. monetary policy.

"No change in the Fed rate is expected. But investors and traders will be listening to hear if there are any changes in 2019 rate hike predictions," Walter Pehowich, executive vice president of investment services at Dillon Gage Metals, said in a note.

The Fed raised U.S. rates in September and said it planned four more increases by the end of 2019 and another in 2020, citing steady economic growth and a robust jobs market. holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust GLD , fell for the third straight session to 756.70 tonnes on Tuesday. GOL/ETF

Among other precious metals, silver XAG= rose 0.1 percent to $14.55 per ounce, while palladium XPD= jumped 1.9 percent to $1,136.90 per ounce.

Platinum XPT= was up 0.9 percent at $875.40 an ounce after hitting $877.50, its highest level in more than four months.

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