Gold price firms

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FE Team | Published: July 30, 2019 23:19:47

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BENGALURU, July 30 (Reuters): Gold prices firmed on Tuesday ahead of a US Federal Reserve meeting at which the central bank is expected to signal how big an interest rate cut the world's biggest economy could take.
Spot gold was up 0.1per cent at $1,428.61 an ounce by 1143 GMT and US gold futures gained 0.6per cent to $1,428.60.
"The big question is what the tone of the Fed will be tomorrow. Interest rates are overwhelmingly likely to be cut. It's just a question of by how much," said Mitsubishi analyst Jonathan Butler.
"Gold is still at six-year highs. Although it has been close to $1,450 recently, it seems to have found a level around $1,425."
Investors awaited cues on the Fed's two-day monetary policy meeting, which begins later in the session and is expected to result in a rate cut of 25 basis points. If implemented, it would be the central bank's first cut to interest rates in a decade.
The bank would be joining peers such as the European Central Bank in signalling the need for rate cuts. The Bank of Japan has also said it would ease "without hesitation" if the economy lost momentum.
Gains in the dollar index, which touched a two-month high of 98.206, on the back of weaker sterling, helped to cap the rise in bullion.
"Liquidity is still thin as traders seem to be holding back before the Fed gives its views on monetary policy," said Phillip Futures analyst Benjamin Lu, adding that gold was being pressured by a firm dollar.
US-China trade negotiations, which begin in Shanghai on Tuesday, were also in the spotlight, though expectations for progress at the two-day meeting are low, with the markets hoping the two sides can at least detail commitments for goodwill gestures.