Gold steady ahead of US Fed policy meeting
London (Sept 16) Gold steadied on Tuesday ahead of a US Federal Reserve policy meeting, remaining near an eight-month low. Investors were unwilling to place big bets as they awaited clues on the timing of the first US rate rise in eight years.
The US Fed will begin its two-day meeting on Tuesday, with an announcement scheduled for Wednesday. Some analysts believe the US Fed could signal it may begin raising rates sooner than mid-2015, the current consensus target.
Any increase in interest rates would dim the appeal of non-interest-bearing assets such as gold.
Spot gold was flat on the day at $1,232.80 an ounce by 2.15pm GMT. The metal posted its biggest weekly fall since late May last week on a stronger dollar and fell to its lowest since January at $1,225.30 on Monday before recovering.
US gold futures lost $1.80 an ounce to reach $1,233.40.
"In the longer term the bearish view for gold has not changed as the dollar has strengthened quite a bit since the beginning of July and US data improved," said Natixis analyst Bernard Dahdah said.
"But if the Fed holds the same tone, I don’t see any particular change in the price of gold over the next few days," the analyst said.
Gold gained some support from weakness in global equity markets, which fell to one-month lows on Tuesday. The dollar was down 0.1% against a basket of currencies and the 10-year US Treasury yield steadied above 2.5%.
Returns from US bonds are closely watched by the gold market, given that the metal pays no interest.
The recent drop in prices failed to attract any robust physical buying from Asia — the world’s biggest gold-consuming region — dealers said, though activity picked up slightly.
In top buyer China, daily trading volume of 99.99% purity gold on the Shanghai Gold Exchange hit a two-week high on Monday. Premiums climbed to about $4-$5 an ounce, compared with $2-$3 last week.
Silver was up 0.2% at $18.61 an ounce, having touched its lowest since June 2013 on Friday.
Platinum was unchanged at $1,360.50 an ounce, while palladium fell 0.1% to $832.50.
Source: bdLive.za
