bullion news-Gold steady as market awaits Fed policy cues

reuters-May 24 Gold held steady on Wednesday, after slipping in the previous session, as investors awaited cues on the U.S. Federal Reserve’s rate hike stance from the minutes of its last meeting. Federal funds futures suggested traders saw about a 79 percent chance that the U.S. central bank would raise key short-term rates by a quarter point to 1.00-1.25 percent at its June 13-14 policy meeting , little changed from Monday’s close, CME Group’s FedWatch program showed. Spot gold was nearly flat at $1,251.29 per ounce, as of 0434 GMT. U.S. bullion news gold futures shed 0.3 percent to $1,251.2 an ounce. “My expectations are that the pace of interest rate hikes will be kept steady and stable regardless of the short-term fluctuations in the U.S. economic data,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group. “I think it is a good thing because it takes sometime for the central bank and the market to build up some sort of consensus upon which we can have some stability.” Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion. A U.S. interest rate hike next month is a “distinct possibility,” the head of the Federal Reserve Bank of Philadelphia Patrick Harker said. Meanwhile, Minneapolis Federal Reserve Bank President Neel Kashkari said while the U.S. economy is closer now than it was in March to full employment, he still does not know “if we are there yet.”   “Gold could face more pain if tonight’s FOMC (Federal Open Market Committee) minutes shows that the Fed is on course for two to three more rate hikes this year,” said Jeffrey Halley, a senior market analyst at OANDA. “Any combination of the above is most likely bullish for the U.S. dollar, especially as post a June hike, the market has not priced this possibility in on its forward indicators.”   Spot gold is expected to test a support at $1,245 per ounce, a break below which could cause a loss to the next support at $1,233, according to Reuters technical analyst Wang Tao. While silver slipped 0.6 percent to $16.93 an ounce, platinum shed 0.1 percent to $939.1 an ounce. In the previous session, silver hit its highest in over three weeks at $17.30, and platinum hit its loftiest in nearly a month. Palladium slipped 0.2 percent to $768.98 per ounce.

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