Gold prices were slightly higher on Tuesday, just up from its lowest in nearly five months in the previous session, and ahead of the start of a two-day U.S. Federal Reserve meeting. Spot gold rose 0.2 percent to $1,244.30 an ounce by 0350 GMT, after hitting its lowest since July 20 at $1240.10 on Monday. U.S. gold futures fell 0.1 percent to $1,246 an ounce. "The overnight drop I suspect is continued long liquidation as evidenced in the weekends Commitment of Traders Report" said Jeffrey Halley, senior market analyst with OANDA. CFTC data from Friday showed speculators sharply cut their net long positions in gold to the lowest since early August due to recent price weakness. "I would expect gold to remain offered on any rally and …to retest its overnight lows around $1,240," Halley said, adding that a hawkish statement on U.S. interest rates from the Federal Open Market Committee could see gold under further pressure. The dollar was steady near a recent two-week high versus a basket of major currencies, as traders awaited results from the U.S. Fed's policy meeting for a fresh catalyst. At the meeting, which concludes on Wednesday, the U.S.central bank is widely expected to raise benchmark interest rates for the third time this year and comment on the pace of further rate hikes. "We expect a steady grind lower in gold, at least through Wednesday," said INTL FCStone analyst Edward Meir. "Depending on how hawkish the wording is, gold could drift lower still, as charts do not show any meaningful support at least until $1,205-$1,210," Meir said. Gold is sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion and boost the dollar, in which it is priced. "Gold is likely to recover quickly from its recent lows if the December meeting outcome proves to be a dovish hike," Standard Chartered said in a note. Reuters technicals analyst Wang Tao said spot gold may bounce moderately to a resistance at $1,250 per ounce, as it has stabilized around a support at $1,239. Among other precious metals, silver was nearly unchanged at $15.72 an ounce. Platinum was down nearly 0.1 percent at $884.20 an ounce, having hit its lowest since February 2016 last week. Palladium was 0.3 percent higher at $1,012.97 an ounce. The platinum discount to palladium widened to around $120 last week, the steepest since April 2001. Source: Reuters
