Gold Extends Recent Slide With Fed in Focus

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Gold steadied near its weakest level in nearly five months on Wednesday amid expectations the Federal Reserve would raise interest rates again at the conclusion of its last policy meeting this year.

Gold is highly sensitive to rising USA rates as these increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.

The Fed has increased rates twice this year and is expected to raise them three more times in 2018.

The U.S. dollar index, a measure of the dollar against a basket of other major currencies, rose 0.24 percent to 94.16 as of 1812 GMT. The WSJ Dollar Index, which tracks the US currency against a basket of 16 others, was up 0.1% Tuesday, paring earlier losses after data was released showing a gauge of USA business prices rose in November, pointing to emerging inflation pressure in the economy. "We're expecting a rate hike", the trader said.

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Spot gold was up 0.25 per cent at Dollars 1,250.93 an ounce at early trade.

Yellen's successor, Fed Governor Jerome Powell, has hinted that he has a cautious approach to rate increases. "Any further strength in the dollar index would push the gold price lower", Aslam said.

Analysts at ScotiaMocatta said momentum indicators showed gold could reach its July low of $1,204.90.

In other precious metals, silver was down 0.1% at $15.71 an ounce, trading near a five-month low of $15.61 hit overnight. Platinum fell for its eight straight session, down 0.9 percent at $876.60 an ounce, after earlier touching its lowest since February 2016 at $868.80. Palladium was unchanged at $1,010 per ounce.