Gold Holds Gains as Dollar Drops After Fed ; Platinum Climbs

 Bareksa.com -  Gold held on to modest overnight gains on Thursday as the dollar weakened after the U.S. Federal Reserve's outlook on interest rates, while platinum group metals rose as new hurdles emerged in settling South Africa's mining strike.

The central bank hinted at a slightly more aggressive pace of interest rate increases starting next year, but lowered projections for the long-run target interest rate, sending the dollar to its lowest in nearly two weeks.  

The Fed cut its U.S. growth forecast for 2014 from 2.9 percent to a range of between 2.1 percent and 2.3 percent, but it also expressed confidence that the U.S. economic recovery was on track.

Spot gold was little changed at $1,276.89 an ounce by 0318 GMT, after rising 0.5 percent on Wednesday.  

"The lower dollar and underlying geopolitical tensions are supportive for gold prices," said a precious metals trader in Hong Kong. "But the lack of strong physical demand and outflows from ETFs could weaken any rally."  

Tensions over Iraq and Ukraine are attracting some safe-haven bids for gold.  

Physical demand in top buyers China and India has been weak, with premiums in both countries dropping in recent days. Indian premiums are at a four-month low, while Chinese prices are
trading between discounts and on par with global prices.  

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, saw two straight sessions of outflows earlier in the week before pausing on Wednesday.  

Holdings of the fund are near a five-year low and reflect bearish sentiment in the market.  

Platinum and palladium extended their winning streak, with both trading near one-week highs as a mining strike in major producer South Africa looked set to drag on.  

South African platinum union AMCU has made "unaffordable" new demands beyond a deal struck with producers last week, miners said on Wednesday, dashing hopes of an end to the country's longest and costliest mining strike.  

PRICES AT 0318 GMT   
 Metal                              Last         Change       Pct chg
                                   
 Spot gold                      1276.89         -0.61          -0.05
 Spot silver                         19.82         -0.04          -0.2
 Spot platinum                 1447.5           3.6            0.25
 Spot palladium                 825.95          3.25          0.4
 Comex gold                    1277.2           4.5            0.35
 Comex silver                    19.845        0.067          0.34
 Euro                                1.3591                 
 DXY                                80.375                

COMEX gold and silver contracts show the most active months (Source : Reuters)