Gold held steady on Tuesday as the dollar stood firm ahead of the two-day U.S. Federal Reserve meeting beginning later in the day, while simmering U.S.-China trade tensions kept investors nervous about risks to global growth. Spot gold was barely changed at $1,198.80 by 0257 GMT. U.S. gold futures were down 0.1 percent at $1,203.10 an ounce. “Gold is glued to the $1,200 see-saw levels with some short positions closing just in case the Fed does something unexpected, give some notion of a pause in the 2019 rate hike cycle,” said Stephen Innes, APAC trading head at OANDA, Singapore. Investors await details from the two-day Federal Reserve meeting beginning on Tuesday, when the U.S. central bank is expected to raise benchmark interest rates and shed light on the path for future rate hikes. “A dovish inference could send gold prices above the critical $1,210 level. There's a lot of cross-action inference on this week's forward guidance from the Fed meeting,” he added. Higher U.S. interest rates typically pressure gold, since it costs to store and insure the metal, but does not pay interest. Gold has fallen more than 12 percent since hitting a peak in April against a backdrop of trade disputes and as rising U.S. interest rates diminish demand for non-interest bearing bullion. China and the United States imposed a new round of tariffs on each other's goods that took effect on Monday, intensifying a trade dispute that is expected to hit global growth. The months-long trade rift between Washington and Beijing drove investors to buy dollar instead of gold in the belief that the United States has less to lose from the dispute. The dollar index against a basket of six major currencies edged up 0.2 percent to 94.325. Gold has been trading around $30 for the past five weeks, but the Fed meeting would be a catalyst for prices to break the range, traders and analysts said. “If lingering trade war fears or renewed emerging market jitters sour sentiment, U.S. dollar may reclaim a haven bid, making gold vulnerable,” said Ilya Spivak, a currency strategist for Dailyfx. “Post-FOMC repositioning may be just the catalyst needed (for gold) to break range support and reboot the dominant (technical) downtrend.” Spot gold may retest a support at $1,194 per ounce, a break below which could cause a loss to the next support at $1,187, Reuters technical analyst Wang Tao said. Among other precious metals, spot palladium hit its highest since February 27 at $1,061.80 and was trading steady at $1,059. Platinum rose 0.4 percent at $827.30 per ounce. Silver was up 0.2 percent at $14.24 an ounce. Source: Reuters
