July 24 (Reuters) - Gold prices edged higher on Wednesday,
recovering from a one-week low touched in the previous session,
on expectations of an interest rate cut by the U.S. Federal
Reserve and escalating tensions in the Middle East.
FUNDAMENTALS
* Spot gold XAU= was up 0.2% at $1,420.40 per ounce as of
0128 GMT, after hitting its lowest since July 17 at $1,413.80 in
the previous session.
* U.S. gold futures GCv1 were steady at $1,420.80 an
ounce.
* Futures FEDWATCH remain 100% priced for a rate cut of 25
basis points (bps) by the Fed next week, and have even priced in
an 18% chance of a 50 bp cut.
* The European Central Bank is expected to signal easier
monetary policy at its meeting this week, while the Turkish
central bank is expected to make a 250 bp cut on July 25.
* A U.S. Navy ship took defensive action against a second
Iranian drone in the Strait of Hormuz last week, but did not see
the drone go into the water, the U.S. military said on Tuesday.
* Meanwhile, the dollar index .DXY edged up to a five-week
high on Wednesday, following gains of nearly 0.5% the previous
day, while the euro slipped to a two-month low. USD/
* U.S. Trade Representative Robert Lighthizer and senior
U.S. officials will travel to Shanghai on Monday for
face-to-face trade meetings with Chinese officials, Bloomberg
reported on Tuesday, citing unnamed sources. * Asian shares nudged higher on Wednesday amid hints of
progress in the Sino-U.S. trade saga. MKTS/GLOB
* SPDR Gold Trust GLD , the world's largest gold-backed
exchange-traded fund, said its holdings fell 0.25% from Monday
to 823.13 tonnes on Tuesday.
DATA AHEAD
* 0800 EU Markit Mfg, Serv, Comp Flash PMIs July
* 1345 US Markit Mfg, Serv, Comp Flash PMIs July
* 1400 US New Home Sales-Units June