Gold edges up as markets eye Federal Reserve’s decision on rates

London: Gold inched up on Monday, after a near 1 per cent jump in the previous session, as investors awaited a US

Federal Reserve rate decision later in the week, while progress in US-China trade talks curbed appetite for safe haven assets.

Spot gold rose 0.2 per cent to $1,506.95 per ounce as of 0700 GMT. US gold futures were up 0.3 per cent at $1,509.60 per ounce.

“All eyes are on the Fed meeting now, but what investors are really looking forward to is some clarity on whether the central bank will continue to remain dovish for the rest of this year,” said John Sharma, an economist with National Australia Bank, adding that the current take on gold is “wait and see”.

The Fed is scheduled to meet on October 29 and October 30, with traders seeing a 90.4 per cent chance for a 25 basis point rate cut, according to CME Group’s FedWatch tool. The US central bank has already lowered interest rates twice this year.

“Gains (if the Fed cut rates this week) may be limited as trade tensions are not as tense as they were over the summer,” AxiTrader market strategist Stephen Innes said in a note.

US President Donald Trump last week said the US was doing very well in its trade negotiations with China and that China wants to make a deal “very badly.” The remarks boosted investors’ appetite for riskier assets, sending Asian shares to a three-month high on Monday.

Both US and China have imposed a series of tit-for-tat tariffs over the past 15 months, stirring global recessionary fears and driving gold prices more than 17 per cent higher this year, but the recent development has put a lid on gains.

However, NAB’s Sharma said “any development on the trade war front will just have an interim effect on gold.” “The situation is far more complicated to be solved in a hurry.” Gold prices were also being weighed by a strong dollar, which makes the metal expensive for buyers holding other currencies.

The dollar index, which measures the greenback against a basket of other currencies, was slightly up on Monday morning after rising nearly 0.6 per cent last week.

Meanwhile, the European Union agreed on Friday to London’s request for a Brexit deadline extension but set no new departure date, giving Britain’s divided parliament time to decide on Prime Minister Boris Johnson’s call for a snap election.

Elsewhere, silver rose 0.4 per cent to $18.09 per ounce.

Platinum was up 0.2 per cent at $927.73 per ounce, while palladium rose 0.8 per cent to $1,777.08 per ounce.