Gold prices gain as dollar dips with Fed meet in focus

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Gold prices edged higher on Monday,

supported by a weaker dollar, as investors assessed some risk of

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aggressive rate hikes expected this week by major central banks

especially the U.S. Federal Reserve to tame inflation.

FUNDAMENTALS

* Spot gold was up 0.2% at $1,677.89 per ounce, as of

0022 GMT. U.S. gold futures rose 0.2% at $1,686.50.

* The dollar index was down 0.2%, making bullion less

expensive for overseas buyers.

* The U.S. Fed’s Federal Open Market Committee is expected

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to begin its two-day meeting on interest rates on Sept. 20 and

announce its decision the following day.

* Most of the banks meeting this week – from Switzerland to

South Africa – are expected to hike, with markets split on

whether the Bank of England will go by 50 or 75 basis points.

0#BOEWATCH

* Meanwhile, U.S. consumers’ near-term inflation

expectations fell to a one-year low in September, easing fears

that the Fed could raise interest rates by a full percentage

point next week.

* Gold is known as a safe investment amid inflation woes,

but high interest rates increase the opportunity cost of holding

non-yielding bullion.

* Physical gold demand picked up in India as domestic prices

fell ahead of key festivals, while premiums in China climbed

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further as its currency weakened.

* Holdings of SPDR Gold Trust , the world’s largest

gold-backed exchange-traded fund, fell 0.1% to 960.85 tonnes on

Friday from 962.01 tonnes on Thursday.

* Speculators switch to net short position of 10,132

contracts in week to Sept. 13 in COMEX gold , while trimmed net

short position in COMEX silver, the U.S. Commodity Futures

Trading Commission (CFTC) said on Friday.

* Spot silver gained 0.2% to $19.59 per ounce.

Platinum fell 0.1% to $906.15 and palladium was

down 0.2% at $2,129.55.

DATA/EVENTS (GMT)

No major data/events expected on Monday, Sept. 19

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by

Sherry Jacob-Phillips)