PRECIOUS-Gold slips as dollar rebounds ahead of U.S. Fed verdict

Jan 27 (Reuters) – Gold prices slipped on Wednesday as the
dollar climbed, with investors’ looking forward to a U.S.
Federal Reserve policy statement for clues on approach to
monetary policy the central bank is likely to adopt.
Spot gold fell 0.6% to $1,838.50 per ounce by 1218
GMT. U.S. gold futures eased 0.7% to $1,838.00.
“To drive gold towards the upper end of the (narrow) range,
(the Fed) will need to adopt a fairly dovish tone, which will
push U.S. 10-year yields back below 1% – that will help gold,”
said Michael Hewson, chief market analyst at CMC Markets UK.
The U.S. central bank is expected to reinforce its
commitment to accommodative monetary policy to aid the virus-hit
economy in its decision due at 1900 GMT.
Easy monetary policy adds pressure on government bond yields
and benefits non-yielding gold.
Meanwhile, U.S. President Joe Biden’s $1.9 trillion stimulus
plan has been met with objections from Republicans over the
price tag.
“The $1.9 trillion is not going to be there and it won’t
come much before March, so the market may have to get used to
the idea of a lower amount at a later point in time,” added
CMC’s Hewson.
U.S. stimulus plan doubts also weighed on U.S. Treasury
yields, while the dollar rebounded and was on track for its best
day in nearly two weeks.
Gold will trade between $1,810 and $1,870 in the near term,
said DailyFX strategist Margaret Yang, adding that in the medium
term, the economic recovery might push yields higher along with
inflation, which would be bearish for bullion.
Silver dropped 1.3% to $25.11 an ounce, while
platinum shed 1.9% to $1,076.96
Palladium fell 0.5% to $2,313.16, sliding for a fifth
straight session having hit its lowest since Dec. 21 at
$2,294.64 earlier in the session.