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PRECIOUS-Gold slips as dollar rebounds ahead of U.S. Fed verdict

Published 27/01/2021, 09:39 pm
© Reuters.
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* Gold expected to trade in $1,810-$1,870 range in near term

* Dovish Fed tone likely to push yields lower, helping gold

* Palladium hits over one-month low

* Interactive graphic tracking global spread of coronavirus: https://tmsnrt.rs/3mvcUoa (Updates prices)

By Asha Sistla

Jan 27 (Reuters) - Gold prices slipped on Wednesday as the dollar climbed, with investors' looking forward to a U.S. Federal Reserve policy statement for clues on approach to monetary policy the central bank is likely to adopt.

Spot gold XAU= fell 0.6% to $1,838.50 per ounce by 1218 GMT. U.S. gold futures GCv1 eased 0.7% to $1,838.00.

"To drive gold towards the upper end of the (narrow) range, (the Fed) will need to adopt a fairly dovish tone, which will push U.S. 10-year yields back below 1% - that will help gold," said Michael Hewson, chief market analyst at CMC Markets UK.

The U.S. central bank is expected to reinforce its commitment to accommodative monetary policy to aid the virus-hit economy in its decision due at 1900 GMT. monetary policy adds pressure on government bond yields and benefits non-yielding gold.

Meanwhile, U.S. President Joe Biden's $1.9 trillion stimulus plan has been met with objections from Republicans over the price tag. $1.9 trillion is not going to be there and it won't come much before March, so the market may have to get used to the idea of a lower amount at a later point in time," added CMC's Hewson.

U.S. stimulus plan doubts also weighed on U.S. Treasury yields, while the dollar rebounded and was on track for its best day in nearly two weeks. USD/ US/

Gold will trade between $1,810 and $1,870 in the near term, said DailyFX strategist Margaret Yang, adding that in the medium term, the economic recovery might push yields higher along with inflation, which would be bearish for bullion.

Silver XAG= dropped 1.3% to $25.11 an ounce, while platinum XPT= shed 1.9% to $1,076.96

Palladium XPD= fell 0.5% to $2,313.16, sliding for a fifth straight session having hit its lowest since Dec. 21 at $2,294.64 earlier in the session.

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