Gold under pressure as investors await Fed for US rate outlook

Gold bars are stacked in safe deposit boxes room of the ProAurum gold house in Munich

Gold added to overnight losses to hover near $1,180 an ounce on Wednesday as investors waited for a Federal Reserve statement for clues on the timing of a U.S. interest rate hike.

Spot gold had eased 0.2 percent to $1,179.01 an ounce by 0655 GMT after dipping 0.4 percent in the previous session. Platinum fell to a six-year low of $1,068.75, while palladium dropped to its lowest since March 31.

All eyes will be on the Fed’s statement due at 1800 GMT after the Federal Open Market Committee’s two-day policy meeting. Fed Chair Janet Yellen’s news conference will also be monitored for pointers to the timing of the coming rate rise.

Also out after the meeting will be the committee members’ latest forecasts for economic growth and interest rates, both of which might be nudged lower.

Bullion has not made much headway in recent months because of uncertainty over the timing of the rate rise, which would reduce demand for non-interest-paying assets.

“Gold may find support at $1,165 if Yellen proves to be unambiguously hawkish tonight,” said Howie Lee, an analyst at Phillip Futures.

“The dollar is likely to be the beneficiary tonight,” he added.

A stronger greenback would hurt the dollar-denominated metal, making it more expensive for holders of other currencies while also curbing safe-haven demand.

The continuing Greek debt crisis is not spurring much safe-haven demand.

Prime Minister Alexis Tsipras accused Greece’s creditors on Tuesday of trying to “humiliate” Greeks with more cuts as he defied a growing drumbeat of warnings that Europe was preparing for his country to leave the euro. [ID:nL5N0Z21I7]

The unrepentant address to lawmakers after the collapse of talks with European and IMF lenders at the weekend was the clearest sign yet that the leftist leader has no intention of making a last-minute U-turn and accepting austerity cuts needed to unlock frozen aid and avoid a debt default within two weeks.

Gold is typically seen as a good bet at times of financial and economic uncertainty, but bids have failed to emerge in a robust way as expectations of a U.S. interest rate rise this year are weighing on the market.

The metal’s technical picture was also bearish, ScotiaMocatta analysts said.

Gold appears increasingly vulnerable to a break towards a recent low near $1,160 reached last month, they said.

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