Gold dips to one-week low; investors await Fed rate call

Gold prices fell to their lowest in a week on Thursday as the dollar and stocks rose, while investors digested the U.S. midterm election results and turned their focus to the Federal Reserve`s monetary policy decision due later in the day.

The Fed is not expected to raise interest rates until its next gathering in December, however market participants are waiting to see whether it offers clues about possible rate increases in December and in 2019.

"A rate increase in December is all but fully priced in, but next year`s outlook is still in flux," said Ilya Spivak, a currency strategist for DailyFX. "A confident tone is likely to weigh on gold, while a cautious one may give it a bit of a lift."

The Fed raised rates in September and said it planned four more increases by the end of 2019 and another in 2020, citing steady economic growth and a robust jobs market. Higher U.S. interest rates tend to boost the dollar and also push up bond yields, reducing the appeal of non-yielding bullion. 

Spot gold was down 0.3 percent at $1,222.31 per ounce, as of 0710 GMT, after hitting its lowest since Nov. 1 at $1,221.1 earlier in the session. U.S. gold futures fell 0.2 percent to $1,226.3 per ounce.

"We see dollar and stocks are a bit stronger and that`s also pushing gold down a little," said Ronald Leung, chief dealer, Lee Cheong Gold Dealers, Hong Kong.

The dollar index, which measures the greenback against a basket of six major currencies, traded in a narrow range and was up 0.2 percent, having touched a more than two-week low in the previous session. 

Asian stocks rose to a one-month peak following a post-election rally on Wall Street. Holdings in SPDR Gold Trust, the world`s largest gold-backed exchange-traded fund, fell 0.19 percent to 755.23 tonnes on Wednesday, marking the fourth straight session on declines.

"Next support (for gold) should be at the $1,216 100-day moving average level. On the upside, gold will need to close above the solid technical resistance at $1,235-36 before contemplating a move higher," traders at MKS PAMP said in a note. In other precious metals, silver fell 0.5 percent to $14.50 per ounce.

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Palladium dipped 0.5 percent to $1,127.55 per ounce. It touched a two-week high of $1,139.50 an ounce in the previous session. Platinum was down 0.2 percent at $870.60 an ounce, after hitting its highest since June 25 at $877.50 an ounce on Wednesday.