PRECIOUS-Gold steadies on dollar retreat; focus on Fed meeting
* May retail sales data due at 1230 GMT
* Spot gold may retest support at $1,842/oz – Technicals (Recasts, adds chart, and updates prices)
June 15 (Reuters) – Gold prices edged higher on Tuesday, as a pullback in the dollar made the metal less expensive for other currency holders, while investors awaited the U.S. Federal Reserve meeting outcome for clues on the trajectory of its unprecedented monetary stimulus.
Spot gold was up 0.1% at $1,867.83 per ounce, as of 0646 GMT, after falling to its lowest since May 17 at $1,843.99 on Monday.
U.S. gold futures gained 0.2% to $1,869.
The dollar weakened 0.1% against its rivals.
“There seems to be surging demand for the Fed’s reverse repo facility, which suggests that liquid conditions in the market are ample. This means that the market is probably prepared to withstand a gradual scaling back of Fed’s asset purchasing,” said Margaret Yang, a strategist at DailyFX.
“Technically, gold has broken down a key support level and it seems to be entering into a bearish trend,” she added.
Investors await the Wednesday outcome of the Fed’s two-day policy meeting. Nearly 60% of economists in a Reuters poll said a much-anticipated taper announcement will come in the next quarter.
Also on the radar, U.S. monthly retail sales data due later in the day.
Recent data showing a spike in U.S. consumer prices has benefited gold as it is seen as a hedge against inflation.
“Expectations are high that the Fed would not change the script of the minutes, but recent labour market improvements and higher inflation numbers do raise the risk that the Fed will be less dovish,” Avtar Sandu, senior commodities manager at Phillip Futures, said in a note.
Spot gold may retest a support at $1,842 per ounce, a break below could cause a fall to $1,825, according to Reuters technical analyst Wang Tao.
Elsewhere, silver dropped 0.5% to $27.71 per ounce, palladium rose 0.2% to $2,756.68, while platinum slipped 0.3% to $1,161.
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