Gold rises as dollar weakens ahead of Fed decision

FOMC decision due at 1800 GMT * Silver, palladium edge higher * Gold still in bullish weekly channel — analyst (Updates prices by 0700 GMT) By Arundhati Sarkar June 14 (Reuters) — Gold prices edged higher on Wednesday, helped by a softer dollar as slowing U.S.

inflation cemented bets that the Federal Reserve would keep interest rates unchanged later in the day. Spot gold rose 0.2% to $1,946.29 per ounce by 0702 GMT. The U.S. gold futures price was little changed at $1,959.20. The U.S.
dollar eased, making greenback-priced bullion more appealing to overseas buyers. The U.S. consumer price index rose 4.0% in May, its smallest annual increase in more than two years, but stayed well above the U.S. central bank’s 2% target. «The Fed, while it may pause at this meeting, will certainly maintain a tightening bias for the foreseeable future (given core CPI is at 5.3%),» said Clifford Bennett, chief economist at ACY Securities. Fed officials sat down on Tuesday for their first meeting in 15 months with no pre-determined rate hike on the table, in what amounts to the debut gathering of the «will-they-or-won’t-they» era. Markets are pricing in a roughly 90% chance of the Fed keeping rates unchanged, according to CME’s Fedwatch tool. «Growing realisation that the Fed is unlikely to cut rates for the rest of this year, has seen a lot of investors exit the gold market of late,» Bennett said. «The price action in the recent range has been a cause for caution, but it does look as though the buy side is going to win out in this epic struggle.» While gold is seen as a hedge against inflation, higher rates to tame price pressures generally weigh on the non-yielding asset’s appeal. «Gold is still in a bullish weekly channel and bullish over medium- and longer-term time frames. It will likely remain that way, although it depends on the language used (by the Fed),» said Nicholas Frappell, global head of institutional markets at ABC Refinery. Spot silver was up 0.4% to $23.78 per ounce, platinum fell 0.1% to $975.55 while palladium was down 0.3% to $1,356.83. (Reporting by Arundhati Sarkar in Bengaluru; Editing by Sherry Jacob-Phillips, penipu Rashmi Aich, Subhranshu Sahu and Louise Heavens)