PRECIOUS gold gains on the subdued dollar as investors focus on the Fed

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B.and Bharat Gautam

September 21 (Reuters)Gold expanded its gains on Tuesday on a subdued dollar as investors focused on the start of a meeting of the US Federal Reserve that may provide clues as to the Fed’s schedule to eventually cut its stimulus to the US economy.

Spot gold XAU = rose 0.8% to $ 1,777.76 an ounce by 1441 GMT (10:41 a.m. EDT) while U.S. gold futures GCv1 rose 0.8% to $ 1,777.00.

The bullion market for gold bullion is bullish on safe haven demand as concerns remain about resuming risky asset sell-offs due to a weaker dollar, despite the recent rally in stocks capping gold’s gains, Jim Wyckoff said, Senior Analyst at Kitco Metals MKTS / GLOB.N

The dollar .DXY slacking off a one-month high in the previous session, making gold cheaper for those holding other currencies. USD /

But the technical picture for gold “remains bearish in the short term … we may see short-term futures traders who have been short, maybe offset and short cover before the FOMC,” added Wyckoff.

The Federal Open Market Committee will publish a policy statement and new economic forecasts at the end of its meeting on Wednesday. Some analysts believe it could herald the start of tapering its asset purchases in the fourth quarter, which could drag gold down.

Less central bank incentives and interest rate hikes tend to increase bond yields and increase the opportunity cost of holding zero-interest gold. It would also help boost the dollar and continue to weigh on gold bars.

“The big question that needs to be answered is, will the current market uncertainty change the likely timetable for the Fed to reduce its bond purchases,” said Michael Hewson, chief market analyst for CMC Markets UK.

silver XAG = rose 1.3% to $ 22.53 an ounce of platinum XPT = was up 3.9% to $ 945.80 and palladium XPD = rose 1% to $ 1,905.23.

(Reporting by Bharat Govind Gautam and Arundhati Sarkar in Bengaluru editing by Paul Simao)

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