US gold futures slipped but held above new two-week lows early Wednesday as traders quietly pared holdings amid a firmer dollar before a US interest rate decision on Thursday, dealers said. By 10:06 am EDT, benchmark August delivery gold on the New York Mercantile Exchange was off 10 cents at $437.60 an ounce, within a $438-to-$435.30 range, and touching its lowest since June 15.
Prices retreated a bit more from Friday's three-month peak at $445.40 as players squared positions. Final trades before the end of the second quarter, Friday's shortened trading session in New York and Monday's US Independence Day holiday also limited more extreme moves in the market. For Wednesday, traders were fixated on the US Federal Reserve and Thursday announcement on rates, said Merrill Lynch in a report.
Many economists as well as Merrill analysts expect it to raise its key lending rates by a quarter point to 3.25 percent.
"The critical issue is whether 3.50 percent on the funds rate proves to be the peak for the cycle," Merrill said.
Pioneer Futures pegged support in COMEX August gold at $436.50 and $433.50 with resistance at $440-$441 Turnover was 19,000 contracts by 10 am EDT.
Open interest in COMEX gold futures had risen sharply in recent days. It last was up 6,104 lots at 308,497 lots as of June 27.
Independent analyst Greg Weldon said he was still bullish on gold relative to currencies, but technical indicators for bullion and the softening in shares of unhedged mining companies was some cause for concern.
Spot gold reached $436.15/6.90, from $435.80/6.50 previously. Wednesday's afternoon fix in London was at $435.80.
COMEX front month July silver fell 5.6 cents to $7.04 an ounce, dealing from $7.11 to $7.02 - its weakest mark since May 25. July's first notice day for delivery is Thursday.
Most active September lost 5.5 cents to $7.085. Spot silver was worth $7.01/04, vs. $7.06/09 previously. The fix was at $7.07.
July platinum eased 20 cents to $885.40 an ounce. October is the next active contract. Spot platinum stayed at $880/885.
September palladium fell $1.55 to $183.50 an ounce. Spot hit $181/185.
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