Gold price up, waiting for clues on timing of US rate rise
New York (Sept 14) Gold prices rose on Wednesdayand the dollar slipped against a basket of currencies and as themarket waited for clues on the timing of interest rate rises inthe United States.
Spot gold was trading up 0.2 percent at $1,321.91 anounce at 1134 GMT. It touched $1,315.27 on Tuesday, the lowestin more than a week. U.S. gold futures were up 0.2percent at $1,326.90 an ounce.
Expectations the U.S. Federal Reserve will raise rates atnext week's policy meeting have receded, putting pressure on theU.S. currency which when it falls makes gold cheaper for holdersof other currencies. "The big picture is the Fed rate hike, which is going to bethe biggest factor for gold, so in the short-term markets willbe looking at U.S. data," said Natixis analyst Bernard Dahdah.
"It's all about the opportunity cost of holding gold. Higherinterest rates make it more expensive to hold gold, which haszero yield."
Markets are pricing in just a 15 percent chance that U.S.interest rates will be hiked this month, according to CMEFedWatch. Many now expect a rise in December after the U.S.presidential election.
Goldman Sachs puts the chances of a rate hike in December at40 percent. Investors also appear to have given up the idea of animminent rise in U.S. rates as can be seen in holdings of goldin physically backed exchange-traded funds, which are down 1.7percent at 56.27 million ounces since August 5. On the technical front, initial resistance comes in around$1,330, near the 21-day moving average.
"Gold is approaching the important $1,300-$1,310 supportzone, which has held incredibly well since the Brexit rally andwill be a key focus for traders in the short term," said AlexThorndike, senior precious metals dealer at MKS PAMP Group.
Spot silver was up 0.8 percent at $19.01 an ounce.
Platinum gained 0.5 percent at $1040.40. It fell morethan 2 percent to touch a more than 2-month low of $1,026.10 onTuesday. Palladium rose 0.9 percent to $657.60 after an8-week low of $648.72 hit on Tuesday.