Gold edges up on lower U.S. dollar; market awaits Fed minutes
Gold bounced up slightly on Tuesday, as a weaker U.S. dollar gave bullion a boost after the previous day`s sharp decline and as investors awaited the minutes, due on Wednesday, of the Federal Reserve meeting held in November.
Gold benefited from some safe-haven buying from investors leery of a political crisis in Germany, Europe`s largest economy.
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U.S. gold futures
"Given the fact that gold and silver prices fell so dramatically yesterday, we have seen a little bargain hunting coming into the market today," said David Meger, director of metals trading at High Ridge Futures in Chicago.
The Fed minutes on Wednesday should provide signals on U.S. monetary policy.
"The Fed rate hike in December is roughly priced in and unless there are very hawkish minutes, it`s more that people are looking for direction about future moves," said Georgette Boelle, a commodity strategist at ABN AMRO.
"It seems likely that we will have more rate hikes next year which is negative for gold but the Fed will want to see evidence that inflation is picking up to really be confident in the interest rate hike path," said Danske Bank analyst Jens Pedersen.
Higher interest rates tend to lift bond yields, supporting the dollar and making non-yielding bullion less attractive to investors.
The dollar index <.dxy>, measuring the currency against a basket of its peers, eased. [FRX/]
BMI Research in a note lowered its gold price forecast slightly to $1,300 per ounce in 2018 and $1,325 in 2019, citing "our view that the U.S. Fed will hike rates by more than is reflected in the market," adding inflation and political risks in 2018 would support gold prices.
Platinum lost nearly 3 percent Monday, its biggest decline since early May. On Tuesday, an industry report said the global platinum market deficit will rise sharply next year.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
01:24 AM IST