Gold price rises from near 5-month low ahead of Fed meeting

New York (Dec 12)  Gold prices inched higher on Tuesday but were still hovering near their lowest in almost five months ahead of a widely expected U.S. interest rate increase this week.

Spot gold was up 0.1 percent at $1,242.86 an ounce by 1130 GMT, after hitting its lowest since July 20 at $1,240.10 on Monday. U.S. gold futures fell 0.1 percent to $1,246.30 an ounce.

With an interest rate rise almost fully priced in, the market is keenly watching the U.S. central bank's two-day meeting for clues of the Federal Reserve's future rate path.
    "The rise is already in the price so it's more about the
outlook the Fed gives," said ABN AMRO commodity strategist
Georgette Boele.
    "Ahead of the Fed meeting, markets are relatively calm
because they don't want to get on the wrong foot."
   Gold is sensitive to rising U.S. interest rates, as these
increase the opportunity cost of holding non-yielding bullion
and boost the dollar, in which it is priced.
    Analysts at Standard Chartered noted that gold would likely
recover quickly from its recent lows if the meeting outcome
proves to be a dovish hike.
    In wider markets, world stocks paused following gains for
three straight sessions, while the dollar was steady after its
recent strong gains.                 
    Oil rose above $65 a barrel for the first time since
mid-2015 as an unplanned shutdown of the UK's biggest North Sea
oil pipeline supported a market already tightened by OPEC-led
production cuts.                 
    "(The) opportunity cost of holding gold is going up because
if you hold gold then you miss the opportunity of higher equity
prices or maybe higher bitcoin prices," said Societe Generale's
head of metals research Robin Bhar.
    "Gold doesn't have a lot of love going forward at the
moment."
    Among other precious metals, silver rose 0.4 percent
to $15.77 an ounce.
    Platinum was steady at $884.74 an ounce, having
fallen for the last seven sessions. It touched its lowest since
February 2016 at $878.50 on Friday.
    Platinum is more heavily used in diesel vehicles, which have
fallen out of favour since Volkswagen's emissions-rigging
scandal.
    Its sister metal, palladium, has benefited from the switch
to petrol engines and expectations for growth in hybrid
gasoline-electric vehicles.
    Palladium was 0.2 percent lower at $1,007.70 an
ounce.
    The platinum discount to palladium widened to around $120
last week, the steepest since April 2001.