March 20, 2018

PRECIOUS-Gold off two-week lows ahead of Fed meet

(Reuters) - Gold was firm on Tuesday, having recoveredfrom over a two-week low hit in the previous session, as traders waited togauge the path of U.S. monetary policy for the rest of the year from thetwo-day Federal Reserve meeting that kicks off later in the day.

Spot gold was flat at $1,316.44 per ounce at 0353 GMT. Inthe previous session, it touched $1,307.51 an ounce, its lowest since March 1.

U.S. gold futures for April delivery dropped 0.1 percentto $1,316.10 per ounce.

"While the market has all but factored-in a ratehike, the focus will remain on the commentary and whether Fed Chair Jerome Powellhints at further rate hikes in 2018," ANZ analysts saidin a note.

Powell is expected to hike interest rates and signalthree more increases this year at the Fed policy meeting.

Though a rate hike today has been factored into thecurrent price, uncertainty remains as to how further tariffs in the UnitedStates will impact global trade, said Cameron Alexander, an analyst withThomson Reuters-owned metals consultancy GFMS.

"This will likely escalate with a tit-for-tatresponse from China, which won't help."

Prices for the yellow metal have not dipped below the$1,300 an-ounce level since the beginning of the year and have been trading ina $23 range since March 8.

A hike of more than 25 basis points would push priceslower, while a significant reaction from China and European countries on (U.S.)tariffs would drive prices higher, said Alexander.

Higher interest rates tend to boost the U.S. dollar andpush bond yields up, pressuring gold prices by increasing the opportunity costof holding non-yielding bullion, while political and financial uncertainty pushup safe-haven demand for the yellow metal.

Holdings at the SPDR Gold Trust, the world's largest gold-backedexchange-traded fund, holdings rose 1.26 percent, their best one-day rise sinceJan. 18, to 850.84 tonnes on Monday from 840.22 tonnes on Friday.

Meanwhile, Asian shares fell after investors took profitsin high-flying U.S. technology shares on fears of stiffer regulation asFacebook came under fire following reports it allowed improper access to userdata.

Among other precious metals, silver gained 0.1 percent to$16.32 per ounce after matching Friday's three-month low in the previoussession.   

Platinum was nearly unchanged at $952.70 per ounce afterhitting its lowest since Jan. 3 on Monday. Palladium declined 0.28 percent to$987.25 per ounce.