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PRECIOUS-Gold pauses as investors await confirmation on Fed stance

Published 29/07/2020, 02:34 pm
© Reuters.
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* Silver eases from multi-year peak

* Gold up more than 28% so far this year

* Interactive graphic tracking global spread of coronavirus: open https://tmsnrt.rs/3aIRuz7 in an external browser (Recasts, updates prices)

By Brijesh Patel

July 29 (Reuters) - Gold was little changed on Wednesday, having retreated from an all-time high as investors booked profits, with caution setting in as focus turned to a U.S. Federal Reserve meeting widely expected to reinforce loose monetary policy.

Spot gold XAU= was steady at $1,959.04 per ounce by 0723 GMT. Prices hit an all-time high of $1,980.57 on Tuesday. U.S. gold futures GCcv1 rose 0.1% to $1,958.20.

"As we get closer to the Fed announcement and the event risk, the market will get a bit more wary," said DailyFx currency strategist Ilya Spivak.

Gold is closely following moves in the dollar as well, Spivak added.

The dollar index resumed its downtrend after a brief pause to hold near its lowest level since June 2018 touched this week .DXY . A weaker dollar, also considered a rival safe haven, makes gold cheaper for holders of others currencies. USD/

Coronavirus cases continued to surge in the United States and stood at over 16.6 million globally. intensifying spread and an escalation in U.S.-China tensions have dented hopes of quick economic recovery, and have been driving inflows to safe-haven assets like gold, which has risen more than 28% so far this year.

The Fed will publish its interest rate decision at 1800 GMT, widely expected to keep rates unchanged, following which Chair Jerome Powell is scheduled to hold a press conference.

"I expect the Fed to maintain its uber-dovish tone and this will support precious metals prices," said Jeffrey Halley, a senior market analyst at OANDA.

Gold tends to gain when interest rates are low, which reduces the opportunity cost of holding non-yielding bullion. It's also considered a hedge against inflation and currency debasement as central bank pump out stimulus.

Republicans in the White House and the U.S. Congress struggled to reach a deal over a $1 trillion aid plan. silver XAG= dropped 1.1% to $24.31 per ounce, platinum XPT= fell 1.1% to $937.93 and palladium XPD= slipped 1.1% to $2,257.49.

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