Gold Gains On Short Covering, Position Evening Ahead Of FOMC
New York (Dec 17) Gold prices ended the U.S. day session moderately higher Monday on short covering following recent selling pressure and as traders squared positions ahead of this week’s FOMC meeting results. The key “outside markets” were also in a bullish daily posture for the precious metals Monday, as the U.S. dollar index was weaker and crude oil prices were higher. February gold was last up $10.00 at $1,244.60 an ounce. Spot gold was last quoted up $6.30 at $1245.50. March Comex silver last traded up $0.481 at $20.085 an ounce.
Traders and investors are anxiously awaiting Wednesday afternoon’s conclusion of the U.S. Federal Reserve’s Open Market Committee (FOMC) meeting. Recent upbeat U.S. economic data and last week’s U.S. government budget deal suggest the Fed will move up its timeline for implementing a tapering of its monthly bond-buying program, also called quantitative easing—possibly as early as this week. A growing number of market watchers think the Fed will indeed announce a tapering this week. Many traders and analysts reckon the actual announcement of the Fed tapering will cause high volatility in markets. While market prices could gyrate a bit in the immediate aftermath of the announcement, I don’t think markets will experience unsettling high volatility. Reason: Traders and investors have had many weeks to digest and factor into market prices the near certainty that the Fed will taper at next next week’s meeting, or early next year.
In overnight news, European stocks and the Euro currency were lifted by upbeat manufacturing data coming out of the European Union. Preliminary EU manufacturing data rose at the fastest pace in over two years in December. The Markit PMI reading for December is 52.7 versus 51.5 in November. A reading above 50.0 suggests growth in manufacturing.
Meantime, stock markets in Asia were mostly weaker following slightly downbeat economic data coming out of China. The preliminary HSBC China PMI came in at 50.5 in December from 50.8 in November.
And in Japan, the key Tankan economic survey showed manufacturers having their best outlook in six years.
The London P.M. gold fix is $1,229.50 versus the previous P.M. fixing of $1,234.75.
