Gold rises on rate cut hopes ahead of U.S. Fed meeting
New York (June 18) - Gold prices rose on Tuesday, having eased in the two previous sessions, supported by expectations of dovish statements from the U.S. Federal Reserve, which begins its two-day monetary policy meeting later in the day.
Spot gold was up 0.5% at $1,345.74 per ounce by 0952 GMT. U.S. gold futures rose 0.4% to $1,348.1 an ounce.
"There is some positioning ahead of the FOMC (Federal Open Market Committee) meeting ... Everyone is waiting to see how dovish Fed's going to be and if there is any sort of signalling of cuts on the way to the interest rates," ING analyst Warren Patterson said.
The U.S. central bank is expected to leave borrowing costs unchanged this time but possibly lay the groundwork for a rate cut later this year. Expectations of an interest cut have been gradually increasing amid the drawn out U.S.-China trade war, signs of the U.S. economy losing steam and pressure by President Donald Trump to ease policy.
These factors have boosted bullion's appeal, with the metal gaining more than 6% since touching a 2019 low of $1,265.85 in early May.
"Gold is testing again the key resistance placed at $1,350-1,360," ActivTrades analyst Carlo Alberto De Casa said in a note.
"The recovery seen after the fall to $1,330/$1,335 of yesterday is witnessing the strength of the bullish movement, as investors continue to bet on a dovish Federal Reserve in the next few months."
Gold, often favoured by investors in times of uncertainty, tends to gain on expectations of lower interest rates.
Also supporting the bullion were some safe-haven bets amid reports of deployment of about 1,000 more U.S. troops to the Middle East, said Afshin Nabavi, senior vice president at MKS SA.
Fears of a confrontation between Iran and the United States have mounted since last Thursday when two oil tankers were attacked, which Washington has blamed on Tehran. Among other precious metals, silver was up 0.4% at $14.89 per ounce.
Palladium climbed about 2% to $1,478.30 per ounce, having hit a high since March 27 at $1,485.55 earlier in the session.
Platinum rose 0.9% to $799.23 an ounce after falling to its lowest since May 31 at $786 earlier in the session.
Reuters
