• Gold held steady on Tuesday as investors remained cautious ahead of a two-day U.S. Federal Reserve meeting that is likely to provide hints on the central bank's interest rate policy for the remainder of the year.
Spot gold was up 0.1 percent to $1,266 per ounce at 0352 GMT. It briefly hit a low of $1,262.61 early in the session, its weakest since June 2.
• "If they are not hawkish, gold could be stable for a little while because there seems to be a bit too much longs in the market," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
While a rate hike in the meeting is a given, people are waiting to hear if the Fed could raise rates again in September or any other time, Leung noted.
• "While the market broadly expects another two hikes in rates in 2017, the tone of the FOMC (Federal Open Market Committee meeting) could set the stage for further weakness in the short term," ANZ bank said in a note.
Higher rates could boost the dollar, making commodities priced in the greenback more expensive for holders of other currencies.
• Silver slipped 0.3 percent to $16.87 an ounce after falling 1.4 percent on Monday in its biggest one-day percentage decline since May 18. The metal had also touched a three-week low of $16.80 an ounce in the previous session.
• With the FOMC meeting scheduled to begin tomorrow, market participants have continued the bearish market sentiment so prevalent last week. Since reaching a high just below $1300 on June 6th, gold prices have traded lower. Gold prices have continued to decline for the last four consecutive trading days.
According to the CME’s FedWatch, there is an extremely high (mid 98.96%) probability that this month’s FOMC meeting will result in an interest rate hike. In most likelihood, an interest rate hike has already been factored into the markets.
Although most analysts believe that current pricing has fully accounted for any interest rate hike, questions remain as to what the Fed will do with the 4 ½ trillion-dollar assets on their balance sheets. While it is clear that the Fed plans to begin liquidation of many of these assets, the timing and quantity of asset sales are a huge unknown.
• "Early next week, we could see some more sideways movement leading up to the outcome of the FOMC meeting on June 14. And that may well be the trigger to send gold past the $1,300 mark," Krauth said on June 9.
If gold prices hit $1,300 per ounce, the precious metal will be up 8.56% year to date. In comparison, an index fund tracking the Dow Jones Industrial Average is up just 7.63%.
However, Krauth expects gold prices to keep climbing once the price hits $1,300 an ounce. His bold gold price prediction for the end of 2017 shows even more market-beating gains.
Reference: Reuters, CNBC, Kitco
Thai
Eng