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Gold eases as investors await U.S. Fed rate policy

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BENGALURU


Gold edged lower on Wednesday as the dollar and equities firmed ahead of the U.S. Federal Reserve’s policy decision due later in the day.

FUNDAMENTALS

Spot gold dipped 0.2 percent to $1,317.26 an ounce at 0051 GMT. Bullion rose 0.4 percent on Tuesday. U.S. gold fell 0.3 percent to $1,317.50 an ounce.

The U.S. Federal Reserve is expected to keep interest rates unchanged this week, deferring any possible increase until September or December, as policymakers hold out for more evidence of a pickup in inflation.

U.S. consumer confidence held steady in July and new single-family home sales hit the highest in nearly 8-1/2 years in June, suggesting sustained momentum in the economy that could allow the Federal Reserve to raise rates this year.

Yen moves and political considerations could be decisive factors for Bank of Japan policymakers agonizing over whether to expand stimulus yet again on Friday or to save their dwindling policy resources in case the economy takes a turn for the worse.

 

The Bank of England is almost certain to cut benchmark borrowing costs when it sets policy on Aug. 4, but a slim majority of economists in a Reuter’s poll said it would hold off for now on restarting its asset purchase programme.

A surge in Western gold investment helped offset sliding Asian demand in the second quarter, GFMS analysts at Thomson Reuters said on Tuesday, as they hiked their gold price forecast for the year in response to jitters over the economic outlook.

Barrick Gold Corp, the world’s largest gold producer, is weighing a sale of its majority stake in African unit Acacia Mining Plc and has approached several South African miners, according to sources familiar with the situation.

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MARKET REPORT

U.S. crude prices fell on Tuesday, hitting three-month lows, on renewed worries of a glut while Brent settled higher due to its better fundamentals versus U.S. crude. – Reuters

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