June 15, 2016
Gold edges down ahead of Fed statement
(Reuters) - Gold fell slightly on Wednesday, after touching a near six-week high in the previous session, as the market awaited the U.S. Federal Reserve's policy
statement amid concerns about a potential British exit from the European Union.
Fed Chair Janet Yellen is scheduled to address the media after the conclusion of a two-day Federal Open Market Committee (FOMC) meeting later in the day.
The central bank is expected to keep interest rates on hold for at least another month, even as strong retail sales for May suggested that economic growth was gaining steam despite a sharp slowdown in job creation.
Spot gold was down 0.1 percent at $1,284.40 an ounce as of 0343 GMT, after touching its highest level since May 6 at $1,289.80 in the previous session.
U.S. gold edged down 0.1 percent to $1,287.30. "We should see a bit of a late snap-back rally in equities (on Wednesday) as the Fed's language will likely be very
dovish," said INTL FCStone analyst Edward Meir.
"This could pull gold back slightly, but we still think that the precious metal has room to move for the balance of the week and heading into next week's crucial vote."
Gold is sensitive to interest rate hikes, which increase the opportunity cost of holding the non-interest yielding metal.
"We expect a hawkish tone from the Fed, which could put the market under some pressure but people are prepared for that. Fed is unlikely to increase rates this month, but we cannot say the same about next month," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
Meanwhile, a referendum on June 23 by Britain to leave the 28-member European Union, dubbed "Brexit," could tip Europe back into a recession, putting more pressure on the global economy and, thereby, boosting the safe-haven appeal of the bullion.
Gold priced in sterling rose to its highest since September 2013 on Tuesday as the British pound fell to an eight-week low against the dollar <GBP=>. The euro nursed losses against the dollar on Wednesday.
Holdings in SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, rose 0.27 percent to 898.67 tonnes on Tuesday, the highest since October 2013.
Spot silver fell 0.1 percent to $17.35 per ounce. On Tuesday, the white metal touched its highest level since May 11 at $17.49.
Palladium touched its lowest in about two weeks at $529.97 an ounce earlier on Wednesday before trading 1 percent higher at $538.42. Platinum was nearly flat at $973.80 per ounce.