27 April 2015
Gold Struggles Below $1,200 on Strong Equities; Fed Meet Eyed
(Reuters) - Gold was languishing near its lowest in five weeks on Monday, as robust equities dented its appeal as a safe-haven, with investors also focusing on the Federal Reserve's policy meeting this week for clues on the timing of a U.S. rate hike.
Spot gold had ticked up 0.3 percent to $1,182.70 an ounce by 0342 GMT. But it failed to make much progress beyond its lowest since March 20 at $1,174.73, reached on Friday as global equities climbed to all-time highs.
Bullion was also weighed down by uncertainty over when the Fed would begin to hike rates. Market expectations have been for a June rate hike, but recent soft economic data has stoked speculation that the U.S. central bank could delay the move to September.
The Fed will kick off a two-day policy meet on Tuesday, with investors watching out for comments on the strength of the economy and the timing of monetary tightening.
"The prospect for a less than hawkish change to the FOMC statement would likely remove some of the near-term pressure that has been baked into the gold price," said HSBC analyst James Steel, referring to the Federal Open Market Committee.
However, this is unlikely to mean more upside for bullion, as expectations for an eventual hike in rates are likely to keep a lid on prices, Steel said.
Investors believe a rate hike could dent demand for gold, a non-interest-paying asset.
In the wider markets, the dollar started the week on the defensive after more disappointing U.S. economic data reinforced expectations the Fed would not hike interest rates soon.
Asian shares scaled seven-year highs following stellar earnings from a few U.S. hi-tech giants.
Gold is usually seen as a safe-haven asset and tends to do well when riskier assets such as equities underperform.
Traders also continued to follow Greece's negotiations with its creditors.
After no deal was reached between Greece and euro zone finance ministers in their meeting on Friday, German Finance Minister Wolfgang Schaeuble hinted on Saturday that Berlin was preparing for a possible Greek default.
A Greek default or a potential exit from the euro zone could cause ripples in the global markets, and boost haven bids for gold.