Gold inches up after two-day fall, Fed eyed

Reuters, (19/6) -- Gold edged up on Wednesday after a two-day drop, but investors remained cautious as they looked to the end of a Federal Reserve policy meeting for clues on the outlook for U.S. economic stimulus.

Spot gold was up 0.06 percent at $1,368.59 an ounce by 0013 GMT, hovering around a nearly one-month low of $1,364.54 touched on Tuesday. U.S. gold rose about $2.

The metal fell more than 1 percent in the previous session as U.S. equities rallied and as bullion buyers took to the sidelines before the conclusion of a two-day Fed meeting that began on Tuesday. A policy statement from the central bank will be released on Wednesday and investors are awaiting guidance on whether the Fed plans to scale back its $85 billion monthly bond purchases.

A winding down, which the markets fear will begin soon due to strong U.S. economic data, would hurt gold - typically seen as a hedge against inflation.

U.S. inflation showed signs of stabilizing in May, suggesting that a worrisome downward trend in core inflation, which began a year ago, might be coming to an end as consumer demand strengthens.

Indian gold futures edged up on Tuesday to their highest in nearly a week, helped by a weaker rupee, but demand remained dull following a hike in import duty.

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.2 percent to 1,001.67 tonnes on Tuesday - their lowest in more than four years.
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