Gold stabilizes at an 8-week high as investors expect a pause from the Fed

Jul 19 (Reuters) – Gold prices hold close to an eight-week high on Wednesday under pressure from a slightly stronger dollar as investors assume the Fed’s monetary tightening cycle will end soon after July.

The gold spot price fell 0.11% to $1,976.5 a troy ounce by 1:02 p.m. Moscow time, after repeating its May 24 high of $1,984.19 on Tuesday.

The dollar index against a basket of six major currencies rose 0.21% to 100.17, making gold more expensive for holders of other currencies.

While a 25 basis point rate hike at the Fed’s July 26 meeting is priced in, the US regulator is expected to remain hawkish, which could pose problems for gold prices, IG’s Yeap Jun Rong said.

Economists polled by Reuters believe that July’s interest rate hike by the Fed will be the last in the current monetary policy tightening cycle.

Lower interest rates reduce the opportunity cost of owning an interest-free precious metal.

“It could also come down to the question of which central bank will turn out to be more hawkish than the other,” said Harshal Barot of Metals Focus. “We may see the euro start to rise against the dollar if the Fed takes a break and the European Central Bank continues to raise interest rates, which could indirectly support gold.”

Investors will also be watching Thursday’s initial weekly US jobless claims, which are forecast to rise to 242,000 from a seasonally adjusted 237,000.

Palladium fell 1.8% to $1,296.02 an ounce, while silver lost 0.24% to $25.02 an ounce. The price of platinum rose 0.32% to $985.85.

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(Seher Darin in Bangalore)