Gold prices firm as dollar dips ahead of Fed rate decision

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BENGALURU - Gold prices edged higher on Wednesday on a weaker dollar and as markets waited for the outcome of the U.S. Federal Reserve's policy meeting later in the day.

Spot gold was up 0.2ercent at $1,160.50 an ounce by 0323 GMT. The metal, which fell nearly 0.4 percent in the previous session, remained above a 10-month low of $1,151.34 an ounce touched on Monday. 

U.S. gold futures were 0.3-percent higher at $1,162.40 per ounce. The dollar index, which measures the greenback against a basket of currencies, was down 0.1 percent at 101. "(The rise in gold prices) is because of the weaker dollar and also the anticipation of what the Fed will decide,
" said Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central. 

"The things that will move the markets more would definitely be on how many times the Fed will raise interest rates next year." The Fed is widely expected to increase U.S.
interest rates at this week's Federal Open Market Committee meeting, with investors looking for clues on the central bank's views on further hikes in 2017. 

Higher U.S. rates raise the opportunity cost of holding non-yielding bullion. The outcome of the policy meeting will be announced at 1900 GMT, followed by Chair Janet Yellen's news conference half an hour later. "We expect gold to remain on the defensive and may weaken further until the conclusion of the FOMC meeting," HSBC analyst James Steel wrote in a note. 

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, are down over 9 pct since November. "ETF liquidation shows investors' uninspired gold view.

viny k.samual

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