Dutch poll worries lift gold; investors wait for Fed
— Gold prices edged up on Wednesday on safe-haven buying due to uncertainty over the outcome of Dutch elections, while markets waited for clues on the pace of US interest rate hikes this year.
With an immediate rate increase by the Federal Reserve seen as a done deal, investors are focusing on what message the central bank will deliver after its two-day meeting on Wednesday. In December, the Fed forecast three rate rises this year.
Spot gold had edged up 0.4 per cent to $1,203.31 per ounce by 0608GMT. US gold futures increased 0.1 per cent to $1,203.30 per ounce.
“We do not think much will change throughout much of Wednesday ahead of the Fed rate decision and policy statement,” said INTL FCStone analyst Edward Meir. “Our bias is still somewhat constructive on gold given that we think the Fed will shrink from coming across as too aggressive.”
Investors were also focusing on Wednesday’s Dutch elections, which have been boosting gold’s safe-haven appeal. The Party for Freedom is seen as having little chance of coming to power. “We expect the bullish bias to continue throughout the session as the Dutch election gives the yellow metal a slight safe-haven bid,” said Jeffrey Halley, senior market analyst at OANDA.
Critical support for gold held around $1,180, analysts said.
Prices have fallen over five per cent since gold failed to sustain a break above its 200-day moving average at around $1,261 in late-February. In Britain, concerns have increased over a second Scottish independence referendum and the triggering of Article 50, which would formally begin British negotiations to leave the European Union. Holdings of SPDR Gold Trust, the world’s largest goldbacked exchange-traded fund, rose 0.36 per cent to 834.99 tonnes on Tuesday from Monday. Holdings rose for a second straight session after outflows last week.
“Positioning seems to be fairly neutral at present so we feel that [a rate hike hike] will keep downward pressure on metals,” said MKS PAMP Group trader Alex Thorndike.
Spot silver rose 0.5 per cent to $16.92 an ounce.
Platinum was up 0.9 per cent at $940.70, while palladium was firm at $743.83.