Gold flat, still near 5-week high ahead of Fed meeting
New York (Oct 28) Gold prices began flat in Monday trading, hovering near a five-week high hit last week, when the precious metal booked a second consecutive hike on investors' expectations that the Federal Reserve (Fed) will continue in its bond-buying program.
Gold futures were seen 0.02% higher at $1,352.80 an ounce, slightly easing of a one-month high hit on Friday, while silver futures added 0.11% to $22.665 an ounce.
Futures of the yellow metal closed at $1,352.50 an ounce, jumping 2.82% over the week on New York's Comex, and posting its best run since late August.
In the past two weeks, gold has gained about 6% as weaker US data and October quarrels over raising the budget ceiling convinced investors that the Fed will put off its decision to taper its monetary stimulus program possibly to March.
The US dollar index, measuring the relative strength of the greenback against a basket of six major currencies, was flat at 79.1720 at the time of writing.
Gold prices have fallen nearly 20% this year as investors started to prepare for the easing of the Fed's stimulus, which saw the rise of the US dollar, which is in direct correlation with the yellow metal.
"We believe the tapering will definitely be delayed and that's positive for precious metals," Brian Lan,managing director of GoldSilver Central, said, adding "gold prices will close above $1,400 by the end of the year."
The Fed's policy-setting committee is due to meet this week and release its statement on Wednesday, with no expectations that any shift to the actual policy of buying $85 billion worth bonds per month will be made as the real damage of the 17-day stalemate over debt deficit to the US economy is not clear yet.
Moreover, demand for physical gold in Asia, which ranks the first globally, has eased following a big rush earlier this year, which dragged the prices down as well.
"Physical demand is quiet because of higher prices. The only market that is buying is India," said Lan.
Holdings in the SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, stood at 872.02 tonnes on Friday.
