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Gold Prices Hold Above $1,300 On U.S. Rate Pause Hopes

Kitco News

Jan 28 (Reuters) - Gold slipped on Monday as a deal to reopen the U.S. government dented safe-haven demand, but prices hovered above the key $1,300-level on hopes the U.S. Federal Reserve will keep interest rates unchanged this week.

FUNDAMENTALS

* Spot gold had fallen 0.1 percent to $1,301.37 per ounce by 0114 GMT, while U.S. gold futures climbed 0.2 percent to $1,300.61 per ounce.

* Asian stocks advanced on Monday as Wall Street rallied after a deal was announced to reopen the U.S. government following a prolonged shutdown that had shaken investor sentiment.

* The shutdown had added to the worries of investors who were already concerned over slowing global growth, signs of stress in corporate earnings and a still unresolved Sino-U.S. trade war.

* Focus is shifting to the Fed’s policy meeting this week, when the U.S. central bank is expected to leave interest rates unchanged. The Federal Open Market Committee meeting is scheduled for Jan. 29-30.

* The Fed raised interest rates four times last year and has signalled it will probably lift borrowing costs twice in 2019, though some central bank officials have said they will be patient in raising rates.

* Spot gold rose 1.8 percent on Friday, its best one-day percentage gain since Oct. 11, to its highest since June 14, 2018. The metal also broke above the psychological level of $1,300 level after failing multiple times due to strong technical resistance.

* Gold tends to appreciate on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.

* China will take steps to spur growth amid a trade war with the United States, but there is limited room for aggressive stimulus in an economy already laden with massive debts and a property market prone to credit-driven spikes, policy insiders said.

* Demand for physical gold in India improved slightly last week as local prices eased from their highest level in over five years, while buying gathered steam in China ahead of the Lunar New Year festival.

* Holdings of SPDR Gold, the largest gold-based exchange traded fund, hovered around their highest levels since late June 2018. (Reporting by Nallur Sethuraman in Bengaluru; Editing by Joseph Radford)

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