Gold price dips as market awaits cues from Fed meeting

London (June 13)  Gold dipped on Tuesday on technical selling, although losses were limited as most investors stayed on the sidelines ahead of a U.S. Federal Reserve meeting that should provide signals on the pace of future monetary tightening.The Fed is widely expected to hike interest rates when it concludes its meeting on Wednesday, although investors will focus on any fresh hints on the pace of hikes this year and its assessment of the economy and inflation.      

"Obviously ahead of the meeting people aren't building significant positions ... If anything, they're expecting a dovish Fed because recent (U.S.) economic data has been weak,"
said Fawad Razaqzada, analyst at FOREX.com.

A lower-than-expected pace of rate hikes would weigh on the dollar, making dollar-priced gold cheaper for non-U.S. investors.

Spot gold dipped 0.2 percent to $1,262.21 per ounce at 0959 GMT, extending losses into a fifth session, after hitting a session low of $1,261.30, its weakest since June 2.

U.S. gold futures for August delivery dropped 0.4 percent to $1,264.40.

The U.S. dollar was treading water ahead of the Fed meeting, with investors also awaiting details from the Fed on its plans to shrink $4.5 trillion dollars of assets it amassed to nurse
the economic recovery.      

Holdings of the largest gold-backed exchange-traded-fund
(ETF), New York's SPDR Gold Trust GLD and the largest
silver-backed ETF, New York's iShares Silver Trust SLV, remained
unchanged on Monday from Friday.            
    Among other precious metals, palladium  edged away
from a 16-year high hit on Friday, and was last down 0.9 percent
to $887.33 an ounce.
    "We see no justification for the strong palladium price,
especially as the Chinese market – the second key automotive
market for palladium – is faltering," Commerzbank said.
    The Commerzbank note, which cited the China Association of
Automobile Manufacturers, said 1.75 million cars were sold in
China in May, which was 2.6 percent down year-on-year.
    Silver slipped 0.4 percent to $16.86 per ounce,
having earlier hit $16.78, its lowest since May 22. In the
previous session, it slid 1.4 percent to its biggest one-day
percentage decline since May 22.

Platinum dipped 0.3 percent to $937.20 per ounce.

Source: Reuters