Gold climbs on dollar weakness, cautious ahead of Fed
* Palladium hits highest since Feb. 27
* Speculators raise net shorts in COMEX Gold
* U.S. Fed's two-day policy meeting starts on Tuesday
(Adds Draghi comments, updates prices)
By Eric Onstad
LONDON, Sept 24 (Reuters) - Gold edged higher on Monday
after the dollar dropped following remarks by the head of the
European Central Bank, although activity was muted ahead of a
U.S. central bank meeting this week.
Spot gold was up 0.3 percent at $1,202.59 an ounce by
1350 GMT, after declining as much as 1.3 percent on Friday.
U.S. gold futures gained 0.5 percent to $1,207 an
ounce. Liquidity was thin during Asian trading hours on Monday
as markets in Japan and China were closed for a holiday.
The dollar index fell after comments by ECB President
Mario Draghi on wage growth and vigorous inflation lifted the
"I remain constructive on gold after we've seen it
consolidate for the past month. The risk to the dollar is some
additional weakness, but at this stage we have to maintain a
neutral stance," said Ole Hansen, head of commodity strategy at
Saxo Bank in Copenhagen.
Gold needed to break above $1,212 to make further progress
on the upside, he added.
Investors are awaiting details from the two-day Federal
Reserve meeting concluding on Wednesday, when the U.S. central
bank is widely expected to raise benchmark interest rates and
shed light on the path for future rate hikes.
"The question is what kind of wording is going to accompany
that hike. Based on that, gold is unlikely to make much of a
move ahead of that meeting," Hansen said.
Gold has fallen more than 12 percent since a peak in April
against a backdrop of trade disputes and as rising U.S. interest
rates diminish demand for non-interest bearing bullion.
The United States and China imposed fresh tariffs on each
other's goods on Monday as the world's biggest economies showed
no signs of backing down from a trade dispute that is expected
to knock global economic growth.
Meanwhile, speculators increased their net short position in
COMEX gold contracts in the week to Sept. 18, U.S. data showed
"The price would rise noticeably if sentiment were to turn
and short positions were to be covered. This may happen
following the Fed rate hike expected on Wednesday, as gold has
often gained following a Fed rate hike in the past," Commerzbank
said in a note.
Among other precious metals, spot silver rose 0.2
percent to $14.28 an ounce. Platinum added 0.1 percent to
$827, after hitting its highest in six weeks at $838.40 on
Palladium gained 0.6 percent to $1,055 an ounce after
hitting a high of $1,060, the highest since Feb. 27.
(Additional reporting by Nallur Sethuraman in Bengaluru.
Editing by Jane Merriman/Louise Heavens/Alexander Smith)
First Published: 2018-09-24 03:12:53
Updated 2018-09-24 16:02:29
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