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Gold stable on Fed rate hike pause prospects, stronger stocks

Gold stable on Fed rate hike pause prospects, stronger stocks

Mubasher: Gold prices remained stable on Tuesday, as prospects of fewer interest rate hikes this year offered support to the precious metal, while a bounce in Chinese stocks fuelled appetite for riskier assets.

By 9:03 am GMT, spot gold went down 0.20% to $1,289.11 per ounce, while US gold futures declined 0.22% to $1,288.40 per ounce.

“We will see market resistance until we see some catalyst that will give some boost to safe-haven assets,” Australia-based IG market analyst Kyle Rodda told Thomson Reuters.

“Markets are sitting on their hands and waiting for more information about the subjects that matter to them,” Rodda added.

Asian equities rebounded on Tuesday after the Chinese government signalled fiscal stimulus measures to stabilise a slowing economy, pursuing a resilient start in the first quarter of this year.

The US dollar retreated on mounting expectations that the Federal Reserve would pause interest rate hikes this year, owing to a slowdown in global growth.

The US dollar index, a tracker of the greenback against six major rivals, ticked up 0.07% to 95.6780.

“The Fed had said earlier they would raise interest rates based on data [...] so the weaker economic data has supported gold prices,” Singapore-based dealer GoldSilver Central managing director Brian Lan told Reuters.

If gold can break the $1,298 mark, $1,300 would not be impossible to touch, Lan added.

It is worth noting that the precious metal tends to gain on expectations of lower interest rates, as the opportunity cost of holding non-yielding bullion becomes lower.

Market focus would be a razor-sharp on any progress in Brexit negotiations as the UK parliament would vote on Prime Minister Theresa May’s deal, which already seems set to be rebuffed by lawmakers.

“If anything goes wrong in today’s meeting, it will be supportive of gold,” Mumbai-based Nirmal Bang Commodities research head Kunal Shah told Reuters.