Gold edges higher as investors await big Fed rate hike move

June 15: Gold prices inched up from a near one-month low on Wednesday, as investors awaited a potentially aggressive and key interest rate hike announcement from the U.S. Federal Reserve as it seeks to combat inflation amid mounting fears of an impending recession.

FUNDAMENTALS


* Spot gold was up 0.1% at $1,810.59 per ounce as of 0051 GMT, after dropping to its lowest since May 16 at $1,803.90 on Tuesday. U.S. gold futures fell 0.1% to $1,811.30.

* Investors have dramatically raised their bets that the Fed will raise interest rates by 75 basis points (bps) rather than 50 bps later in the day, a swing in expectations which has fuelled a violent selloff across world markets.

* Rising short-term U.S. interest rates and bond yields increase the opportunity cost of holding bullion, which yields no interest.

* Benchmark U.S. 10-year Treasury yields edged off a multi-year peak, providing some support to gold.

* World stocks extended losses on Tuesday, while the dollar clung to multi-year highs, as surging inflation led investors to brace for what could be the largest U.S. interest rate hike in 28 years.

* A stronger dollar makes greenback-priced bullion more expensive for buyers holding other currencies.

* SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.46% to 1,063.94 tonnes on Tuesday from 1,068.87 tonnes on Monday.

* Spot silver dipped 0.1% to $21.06 per ounce, while platinum gained 0.3% to $921.84, and palladium firmed 0.3% to $1,820.35.

DATA/EVENTS (GMT) 0200 China Urban Investment (YTD) YY May 0200 China Industrial Output YY May 0200 China Retail Sales YY May 0645 France CPI (EU Norm) Final MM, YY May 1100 EU Reserve Assets Total May 1230 US Retail Sales MM May 1800 US Federal Open Market Committee announces its decision on interest rates followed by statement