LONDON: Gold was stable near one-year lows on Wednesday on a stronger dollar, as the market waited for signals on the direction of US monetary policy from a Federal Reserve meeting later in the day. Spot gold inched 0.1 per cent lower to $1,221.14 per ounce by 1230 GMT, close to a one-year low of $1,211.08 reached on July 19. US gold futures were 0.2pc lower at $1,230.70 an ounce.

The Fed is expected to keep rates unchanged, but solid economic growth combined with rising inflation is likely to keep it on track for another two hikes this year, sapping demand for non-interest-paying gold.

“People are waiting to understand what is going to happen with the Fed later but there are no signals of recovery at all for gold,” said ActivTrades chief analyst Carlo Alberto De Casa, who said bullion remained in a bearish trend. “The most important thing that gold is that it’s looking at two rate increases this year which is adding pressure on gold, making the scenario weak for bullion.”

A key support area for gold in the short term is around $1,211-$1,215 per ounce, De Casa said, with gold having failed to rise above $1,235. The US dollar, in which gold is priced, rose against a basket of leading currencies after a source familiar with the Trump administration’s plans said the White House was about to propose higher tariffs on $200 billion in Chinese imports.

“Bullion is falling every time the US Dollar is strengthening, but its unable to recover when the greenback loses ground, confirming that there’s little investor appetite for gold in this phase,” ActivTrades’ De Casa said.

Meanwhile, trade tensions also pushed world stocks lower as investors feared a trade war between Washington and Beijing could hit global growth. Hedge funds and money managers increased their net short position in COMEX gold contracts to a record in the week to July 24, US Commodity Futures Trading Commission data showed.

Silver declined 0.4pc to $15.44 an ounce. Platinum lost 1.2pc to $824.70 an ounce and palladium slipped 0.5pc to $924.65 an ounce.

Published in Dawn, August 2nd, 2018