Gold price slips on dollar recovery ahead of U.S. Fed rate decision

London (Feb 1)  Gold slipped on Wednesday as the dollar recovered from over 7-week lows and traders waited to see if the U.S. Federal Reserve will keep its interest rates unchanged amid
uncertainty over the policies of President Donald Trump.

Spot gold edged down 0.2 percent to $1,208.67 an ounce by 0625 GMT. U.S. gold futures slipped 0.1 percent to $1,207.80.

Spot gold gained more than 5 percent in January - its best month since June 2016 - as investors sought safe ground.

"The uncertainty the Trump government brings has worried the markets. What Trump does is beyond our expectations and people are kind of playing it safe by holding gold positions and
waiting to see what happens in other markets," said Yuichi Ikemizu, head of commodity trading at Standard Bank in Tokyo.
    The dollar suffered its worst January in three decades after
President Trump complained that every "other country lives on
devaluation."
    The comments intensified expectations that the new U.S.
administration was making moves to talk down the greenback just
hours after Trump's top trade adviser, Peter Navarro, told the
Financial Times that Germany is using a "grossly undervalued"
euro to gain advantage over the United States and its own
European Union partners.
    The dollar index, which measures the greenback
against a basket of currencies, rose 0.3 percent to 99.788 as
bargain hunters stepped in.
    The Fed is expected to keep U.S. interest rates unchanged on
Wednesday in its first policy decision since President Trump
took office, as the central bank awaits greater clarity on his
economic policies.
    "They (Fed officials) might emphasize that they want to
raise rates in the future, but there is not going to be any
surprises," Ikemizu said.
    Spot gold is expected to retrace to a support at $1,197 per
ounce, as it has more or less completed a bounce from the Jan.
27 low of $1,180.65, according to Reuters technical analyst Wang
Tao.
    "We think that the bumpy start to Trump's presidency will
likely continue for a little while longer, lending an uneasy
tone to the markets, but one which will provide fertile upside
ground for gold," INTL FCStone analyst Edward Meir said.
    The bullish view is underscored by some of Wall Street's
largest fund managers betting on gold, wagering that Trump's
governing style and upcoming elections in Europe will combine to
create more stock market volatility and boost demand for the
metal seen as a safe haven.
    Spot silver fell 0.7 percent to $17.41 an ounce,
after touching its highest in more than 11 weeks at $17.61.
    Platinum was firm at $994. Palladium was
mostly unchanged at $753.23.

Source: Reuters