PRECIOUS-Gold holds tight range on mixed Fed signals

  • 6/24/2021
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* Gold may test support at $1,769/oz - technicals * Two Fed officials say inflation pressures may last some time * U.S. initial jobless claims, Q1 final GDP data at 1230 GMT (Updates with comment, updates prices) June 24 (Reuters) - Gold edged higher, buoyed by a slight dip in the dollar, on Thursday but gains were limited as mixed signals from U.S. Federal Reserve officials on stimulus withdrawal kept investors on their toes. Spot gold gained 0.2% to $1,782.27 per ounce by 1045 GMT, while U.S. gold futures shed 0.1% to $1,782.30. Gold was still on “shaky” ground and was “likely to swing between losses and gains as investors navigate conflicting signals from Fed officials”, said senior analyst at FXTM Lukman Otunga. Investors were likely to adopt a cautious approach towards gold as they await U.S. inflation data on Friday, Otunga added. A day after Fed Chairman Jerome Powell said interest rates would not be raised too quickly, two Fed officials said on Wednesday a period of high inflation may last longer than anticipated, with Atlanta Fed President Raphael Bostic expecting a rate increase in late 2022. A lower dollar index buoyed gold, making it cheaper for those holding other currencies. Gold faced technical resistance around the $1,805-$1,830 range and “that’s going to make some people a bit nervous”, StoneX analyst Rhona O’Connell said. But longer term, negative real interest rates should support gold, O’Connell added. Gold, considered an inflation hedge, also benefits from lower interest rates, which reduce the opportunity cost of holding non-yielding bullion. The Fed’s hawkish tone last week drove a 6% fall in bullion. Focus is also on weekly U.S. labour data. Improved jobless claims data “may bring more hawks to the policy discussion table” pressuring gold, FXTM’s Otunga said. Silver rose 0.5% to $25.99 per ounce, while platinum fell 0.1% to $1,082.98. Palladium rose 0.3% to $2,620.42. Higher automobile output once an ongoing chip shortage ends and solid economic growth could drive prices of autocatalyst platinum higher over the next 12 months, UBS analyst Giovanni Staunovo said in a note, forecasting end-December prices at $1,250. Reporting by Arundhati Sarkar and Arpan Varghese in Bengaluru, Editing by Mark Potter, Robert Birsel Our Standards: The Thomson Reuters Trust Principles.

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