Gold price eases from six-week high ahead of Fed decision

London (Jun 15)  Gold fell from the previous session's six-week high ahead of a Federal Reserve policy decision later on Wednesday, though concerns over an upcoming vote on Britain's membership of the European Union underpinned
prices.

The metal has rallied for the last five sessions as assets seen as higher risk, such as shares, saw heavy losses on the back of Brexit fears, while yields on safe-haven German Bunds
fell below zero for the first time.
    Gold has taken a breather, however, as dealers await the Fed
meeting. The metal is highly sensitive to U.S. interest rates,
increases in which lift the opportunity cost of holding
non-yielding gold, while boosting the dollar, in which it is
priced.
    Spot gold was down 0.3 percent at $1,281.34 an ounce
at 0930 GMT, while U.S. gold futures for August delivery
were down $3.30 an ounce at $1,284.80.
    The Fed is expected to keep interest rates unchanged on
Wednesday and signal if it still plans to raise rates twice in
2016 amid concerns about a U.S. hiring slowdown and Britain's
possible exit from the European Union.
    "It's unlikely that the Fed will press ahead with a rate
hike," Capital Economics analyst Simona Gambarini said. "The
general feeling is that even July could be quite a stretch, and
that September is actually more likely."
    "The rally in the gold price has been prompted by Brexit and
the potential impact the UK leaving could have on U.S. monetary
policy as well as the global economy. That is the next event to
look for."
    European shares rose and sterling gained against the dollar
and yen on Wednesday. The pound is recovering from a slide to
two-month lows on concerns over next week's Brexit referendum.
 
    Gold priced in sterling was down nearly 1 percent
after hitting its highest in nearly three years on Tuesday.
    Holdings in SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, rose 0.27 percent to 898.67
tonnes on Tuesday, the highest since October 2013.
    Appetite for gold in Asia, home to the world's biggest
physical bullion markets, was muted overnight.
    "Today's FOMC announcement is likely resulting in many
participants taking a back seat and the metal held a narrow
range accordingly," MKS said in a note.
    Among other precious metals, silver was flat at
$17.38 an ounce, platinum was up 0.5 percent at $978.25
an ounce and palladium was up 1.2 percent at $539.50 an
ounce.

Source: Reuters