By Manolo Serapio Jr
MANILA (Reuters) – Gold steadied at just below $ 1,100 an ounce on Wednesday, trading not far from a 5-1/2-year low, as investors awaited the outcome of the U.S. Federal Reserve’s meeting for more signs on the timing of this year’s interest rate increase.
After last week’s rout, gold was stuck in narrow ranges ahead of the conclusion of the Fed’s policy meeting later in the day.
Policymakers are likely to affirm the strength of the U.S. economy and labour market that puts them on track to raise interest rates as early as September, suggesting more downside risk for non-interest yielding gold.
“We still remain somewhat cautious about gold over the short-term, and suspect that the dollar could start to push higher over the balance of the week, possibly triggered by Wednesday’s upbeat Fed policy statement,” INTL FCStone analyst Edward Meir said.
“We also do not see any imminent upside price drivers for gold at the moment, with physical, investor and fund demand all being rather uninspiring.”
Spot gold was up 0.3 percent at $ 1,098 an ounce by 0630 GMT.
The metal touched $ 1,077 last week, its weakest since February 2010, following a selloff in New York and Shanghai as investors cut their exposure on fears of further price declines.
After breaching the $ 1,100 support level, gold has found it tough to recover and stay above that mark, indicating bearish investors continued to hover in the market.
U.S. gold for August delivery was little changed at $ 1,097.40 an ounce.
Global gold demand shrank to its lowest since 2009 in the second quarter as China poured funds into its now troubled equities market and imports by India dropped to the lowest in five quarters, according to a report by GFMS, a division of Thomson Reuters.
Holdings of the largest gold-backed exchange-traded-fund, New York’s SPDR Gold Trust, were unchanged at 21.87 million ounces on Monday, the lowest since September 2008, following a seven-day slide.
In other metals, spot palladium gained 0.7 percent to $ 623.55 an ounce and platinum rose 0.2 percent to $ 983.50, both not far above multi-year lows. Silver edged up 0.3 percent to $ 14.72 an ounce.
(Editing by Ed Davies and Sunil Nair)
