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PRECIOUS-Gold steady as Fed rate hike concerns weigh on dollar

Published 19/10/2016, 06:40 pm
© Reuters.  PRECIOUS-Gold steady as Fed rate hike concerns weigh on dollar
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* Spot gold may test resistance at $1,266 - Technicals

* Silver off one-week high hit on Tuesday (Updates prices)

By Apeksha Nair

Oct 19 (Reuters) - Gold prices held ground on Wednesday on a weaker dollar amid uncertainties around the timing of a rate hike by the Federal Reserve and upcoming U.S. presidential election.

Spot gold XAU= was firm at $1,262.00 an ounce at 0731 GMT. In the previous session, the precious metal touched $1,264.78, its highest since Oct 10.

U.S. gold futures GCcv1 was broadly unchanged at $1,262.8 an ounce.

Recent support for gold prices has had to do with the demand mostly from China and emerging markets, said Richard Xu, a fund manager at HuaAn Gold, China's top gold exchange-traded fund.

"If you look at the Chinese local gold prices, they are roughly 2 percent higher than the global gold prices," Xu added.

"The dollar is probably showing some kind of a weakness after pushing out so high, so that might also help the gold stabilise for a while."

The dollar stepped back from a seven-month high against an index of currencies on Wednesday after U.S. consumer prices showed a moderation in underlying inflation, prompting markets to trim bets on a December Federal Reserve rate hike. USD/

A Reuters poll showed chances the Federal Reserve will raise interest rates in December are now put at 70 percent. is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.

Spot gold XAU= may test resistance at $1,266 per ounce, as suggested by its wave pattern and Fibonacci projection analysis, according to Reuters technical analyst Wang Tao. shares rose for a second session as a barrage of Chinese data confirmed that the economy had stabilised. MKTS/GLOB

"We remain relatively negative on gold short-term despite a stronger start to the week," INTL FCStone analyst Edward Meir said in a note.

"We expect further dollar strengthening going into Q4 on account of an election victory for Hillary Clinton along with the likelihood of a Fed rate hike."

Among other precious metals, spot silver XAG= was steady at $17.59 an ounce. It hit a more-than-one-week high of $17.71 on Tuesday.

Platinum XPT= and Palladium XPD= were also mostly unchanged at $940 and $637.60, respectively.

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