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PRECIOUS-Gold steady as markets cautious ahead of Fed statement

Published 2018-06-13, 03:19 a/m
© Reuters.  PRECIOUS-Gold steady as markets cautious ahead of Fed statement
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* Fed statement due at 1800 GMT

* Fed rate hike priced in, focus on monetary policy outlook

* ECB, BOJ policy meetings due later this week

* Dollar at 3-week high vs yen

By Karen Rodrigues

BENGALURU, June 13 (Reuters) - Gold prices held steady on Wednesday after falling to a one-week low in the previous session, as investors waited for clues on the pace of future interest rate hikes by the U.S. Federal Reserve when its policy meeting concludes later in the day.

Spot gold XAU= was little changed at $1,295.02 per ounce at 0634 GMT after it touched a one-week low of $1,292.60 in the previous session.

U.S. gold futures GCcv1 for August delivery were 0.1 percent lower at $1,298.50 per ounce.

"The rate hike is almost a done deal, it is quite clear that they will most likely increase rates by another 25 basis points, but the market watchers are looking very closely on the language rather than the rate hike," said OCBC analyst Barnabas Gan.

"People will be looking very closely to see if there's any forward guidance that will indicate if there will be a fourth rate hike into the year-end."

U.S. monthly consumer inflation rose moderately in May, suggesting the Fed could continue to gradually raise interest rates this year. Federal Open Market Committee is expected to announce its decision on rates at 2 p.m. EDT (1800 GMT).

"We could see further weakness (in gold prices) heading into the Fed meeting on Wednesday, as the dollar might rally going into the policy statement," INTL FCStone analyst Edward Meir said in a note.

The dollar, which measures the greenback against a basket of six major currencies, was up 0.2 percent at 110.55 yen JPY= , after touching 110.68, its highest since May 23. USD/

Gold is highly sensitive to U.S. interest rates, which lift the opportunity cost of holding non-yielding bullion and boost the dollar, in which it is priced.

"Beyond the Fed, the ECB meeting tomorrow will also be important. Both the meetings have come hand-in-hand in trying to think about how gold prices will move," OCBC's Gan said.

The European Central Bank (ECB) meets on Thursday, when it could signal intentions to start unwinding its massive bond purchasing programme. Bank of Japan's two-day monetary policy meeting also begins Thursday.

The yellow metal is biased to drop sharply towards a range of $1,263-$1,278 per ounce, as its consolidation within a wedge is ending, Reuters technical analyst Wang Tao said. TECH/C

In other precious metals, silver XAG= fell 0.2 percent to $16.83 an ounce. It hit a seven-week high of $16.95 in the previous session.

Palladium XPD= was nearly unchanged at $1,018.41.

Platinum XPT= was 0.5 percent lower at $889.80 per ounce, after hitting a one-week low of $889.40 earlier in the session.

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