By Jan Harvey
LONDON (Reuters) - Gold dipped on Wednesday as the dollar strengthened, but prices remained largely rangebound ahead of a speech by Federal Reserve Chair Janet Yellen this weekend which will be closely watched for further clues on U.S. interest rate policy.
Yellen is scheduled to address a meeting of central bankers in Jackson Hole, Wyoming. Recent hawkish comments from policymakers have raised investors' expectations that she might adopt a less cautious tone on rates.
Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
Strength in the dollar helped push gold a touch lower on Wednesday. The U.S. unit crept up after falling the previous day but was unable to break out of recent trading ranges.
Spot gold was at $1,336.76 an ounce at 1416 GMT, down 0.8 percent, while U.S. gold futures for December delivery were down $16.30 an ounce at $1,329.80.
"It's all still up to what happens at Jackson Hole," UBS analyst Joni Teves said. "Up until then, it's very hard to make a call."
"Based on market pricing, it seems there is a general expectation for a December move, so (the statement) would have to be quite hawkish for markets to bring forward that expectation to September," she said. "Heading into a Fed rate hike, gold is likely to come under pressure."
Minutes from the U.S. central bank's July 26-27 policy meeting showed officials remain divided over whether it is time to act. According to the CME FedWatch tool, markets are pricing in a 21 percent chance of a rate increase in September, and a 50 percent chance of at least one rise by the end of the year.
Expectations the Fed will hold off on further rate increases have been behind a more than 25 percent rally in gold this year.
"Market participants will probably exercise restraint in the run-up to Yellen's speech, which means that gold and silver prices are unlikely to change much - at least until Friday afternoon," Commerzbank said in a note.
Spot silver was down 1.1 percent at $18.81, off an earlier more than seven-week low of $18.53.
China's silver imports in July fell 36 percent, customs data showed on Wednesday, while platinum imports were down by nearly half. Palladium imports rose 17 percent, however.
Platinum was down 1.9 percent at $1,076.95. Palladium was down 1.7 percent at $685, after hitting a one-week low of $680.20 in the previous session.
(Additional reporting by Nallur Sethuraman in Bengaluru; editing by Jason Neely and David Clarke)
Disclaimer: No Business Standard Journalist was involved in creation of this content
