Gold flat on caution ahead of Fed’s rate decision next week

Gold prices were flat on Wednesday as cautious traders awaited the U.S. Federal Reserve’s interest rate decision at its policy meeting next week, although a softer dollar kept the bullion supported.

FUNDAMENTALS

* Spot gold was little changed at $1,963.83 per ounce by 0027 GMT. U.S. gold futures were listless at $1,980.20.

* The dollar index eased slightly, making gold less expensive for overseas buyers.

* Supply gain pressures continued to abate in May, the New York Fed said in a report on Tuesday, further reducing what had been one of the key forces driving up inflation pressures around the world.

* World shares edged higher on Tuesday as investors mulled whether a recent rally in stocks has legs to run further, while Treasury yields drifted higher as traders pared bets that U.S. rate cuts are on the horizon given sticky price pressures.
* The U.S. consumer price report for May on June 13, ahead of the Fed’s much awaited meeting, will provide investors more clarity on the health of the economy following recent economic data and dovish remarks from Fed officials. * Fed fund futures indicate traders have priced in a 80.6% chance that the Fed will hold interest rates in the 5%-5.25% range, according to CMEGroup’s Fedwatch tool. However, they see 51% odds of another 25-basis-point rate hike in July.

* Non-interest-bearing bullion tends to become less attractive in a high interest rate environment.

* SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.15% to 938.11 tonnes on Tuesday from 939.56 tonnes on Monday.

* Spot silver rose 0.1% to $23.6131 per ounce, platinum added 0.3% to $1,034.55, and palladium gained 0.4% to $1,419.07.

DATA/EVENTS (GMT) 0300 China Exports, Imports YY May 0300 China Trade Balance May 0600 Germany Industrial Output MM April 0600 Germany Industrial Production YY April 1230 US International Trade April 1900 US Federal Reserve issues Consumer Credit for April