PRECIOUS-Gold rises as Fed hints at rate cuts in 2019

Reuters

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    * Fed holds rates steady
    * Palladium scales new 12-week high

 (Adds quote, details, updates prices)
    By Karthika Suresh Namboothiri and Diptendu Lahiri
    June 19 (Reuters) - Gold prices climbed on Wednesday after
the U.S. Federal Reserve signalled interest rate cuts were
possible later this year, as it responded to increased economic
uncertainty and tepid inflation.
    Spot gold  XAU=  rose 0.3% to $1,349.40 per ounce as of 2:43
p.m. EDT (1843 GMT). U.S. gold futures  GCcv1  settled 0.1%
lower at $1,348.8 per ounce.
    "Gold rallies about $9 so far despite current rates
unchanged as dots suggest a split Fed, but cuts clearly in the
pipeline," said Tai Wong, head of base and precious metals
derivatives trading at BMO.
    Seven of 17 policymakers said they expected it would be
appropriate to cut rates by half of a percentage point by the
end of 2019, and an eighth saw a rate cut of a quarter point as
appropriate.  urn:newsml:reuters.com:*:nW1N22I01T
    "The biggest fly in the amber is a surprise U.S.-China trade
deal which would completely change the broad narrative," Wong
said.
    While new economic projections showed policymakers' views of
growth and unemployment largely unchanged, policymakers saw
headline inflation at just 1.5 percent for the year, down from
the 1.8 percent projected in March. 
    They also expect to miss their 2 percent inflation target
next year as well.
    The long-drawn trade tussle between China and the United
States has rattle global markets since it began and raised
concerns of an economic recession.
    The presidents of the world's two largest economies agreed
to revive their troubled talks at a G20 meeting later this
month.  urn:newsml:reuters.com:*:nL4N23Q1X0
    The U.S. central bank is not alone in contemplating rate
cuts. European Central Bank President Mario Draghi hinted on
Tuesday that if inflation failed to pick up, more policy easing
could be on its way.  urn:newsml:reuters.com:*:nL8N23P1Q4
    Lower interest rates reduce the opportunity cost of holding
non-yielding bullion.
    "We think the recent rally in gold rally has been as a
result of combination of two things, the trade issues and
central banks cutting rates. I don’t think these two have
factored in completely yet," said Suki Cooper, precious metals
analyst at Standard Chartered Bank.
    Amongst other precious metals, silver  XAG=  rose 0.3 % to
$15.05 per ounce, while platinum  XPT=  rose 0.7% to $804.88 per
ounce.
    Palladium  XPD=  gained 1.3% to $1,498.41 per ounce, having
hit its highest since March 27 at $1,502.02 earlier in the
session.

 (Reporting by Karthika Suresh Namboothiri and Diptendu Lahiri
in Bengaluru; editing by Jonathan Oatis and Chizu Nomiyama)
 ((karthikasuresh.namboothiri@thomsonreuters.com; +91 80 6749
0997 (If within U.S. call 651-848-5832); Reuters Messaging:
karthikasuresh.namboothiri.thomsonreuters.com@reuters.net))

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