US MIDDAY: gold slips

Gold prices slipped on Monday as the prospect of imminent interest rate rises kept them near the five-week lows touched last week. However, losses were limited by elections in Europe creating uncertainty and fuelling investor buying. Spot gold was down 0.1 percent at $1,203.4 an ounce at 1512 GMT. That compares with $1,194.55 last Friday, its lowest level since January 31. US gold futures were up 0.2 percent at $1,203.4.
Investors are focusing on Wednesday's Dutch elections. The chance of a eurosceptic party coming to power in the Netherlands is seen as small but a strong election performance could fuel speculation of a surprise result in French presidential elections in April and May.
Wednesday is also the second day of the US Federal Reserve's two-day meeting. A decision to raise rates will boost the US currency, which when it rises makes dollar-priced commodities more expensive for non-US firms. "A rate rise from the Fed is pretty much priced in, we're probably going to see two more hikes this year," said Oxford Economics analyst Daniel Smith. "A period of higher rates will tend to mean pressure on gold prices."
The statement from the Fed, due to be released at 1800 GMT followed by a briefing at 1830 GMT, will be scrutinised for any changes in thinking among policymakers. "A Fed hike on Wednesday is fully discounted by the market ... the only thing that might prompt a surge in the dollar and rates is if the FOMC members lift the number of rate hikes they expect this year," ICBC Standard Bank said in a note.
Traders said gold would have to close above $1,209, the 55-day moving average, to make further headway on the upside. Downside support remains at the psychological level of $1,200 an ounce. Recent selling by investors can be seen in the holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, which fell 1.06 percent to 825.22 tonnes on Friday.
Hedge funds and money managers also slashed their net long positions in COMEX gold from the highest in three months in the week to March 7, US Commodity Futures Trading Commission data showed on Friday. Silver slid 0.4 percent to $16.95 an ounce, platinum lost 0.1 percent to $940.6 an ounce and palladium rose 0.9 percent to $750.5 an ounce.