Gold steadies at 5-week high in anticipation of the FOMC
New York (Oct 28) Gold prices ended the U.S. day session not far from unchanged but did hit a five-week high in mostly lackluster trading Monday. Mild profit taking, some chart-related buying and some backing and filling on the charts were all seen at some point during the trading session. December Comex gold was last down $0.30 at $1,352.30 an ounce. Spot gold was last quoted up $0.20 at $1353.50. December Comex silver last traded down $0.109 at $22.53 an ounce.
It was an overall quieter trading affair Monday amid a lack of major economic data issued overseas overnight, not much market reaction to some fresh U.S. economic data, and as traders and investors are looking ahead to this week’s U.S. Federal Reserve’s Open Market Committee meeting. U.S. economic data released Monday included industrial production and capacity utilization, pending home sales and the Texas manufacturing outlook survey.
The FOMC meeting begins tomorrow and ends Wednesday at midday. The FOMC is expected to leaving U.S. monetary policy unchanged, but as usual traders and investors will be looking for any clues on the timing of changes in policy. Most in the market place believe the Fed will not start to cut back on its monthly bond purchases until early next year—most likely the second quarter at the earliest. This scenario favors the raw commodity market bulls, including the precious metals markets. Any hints at this week’s FOMC meeting that the “tapering” of monetary policy could come sooner than the second quarter of 2014 would likely be bearish for most markets.
Also, beginning in November the European Central Bank starts its stress tests on major financial institutions in the EU. It’s believed that there are a lot of non-performing loans on the books of EU banks, so the stress tests and any bad results could impact the market place. Such a situation would likely be bullish for the safe-haven gold, and U.S. and German bond markets.
The U.S. dollar index was firmer Monday, on tepid short covering after hitting a 10.5-month low on Friday. The firmer greenback did somewhat limit buying interest in gold and silver Monday. Meantime, Nymex crude oil futures were firmer on short covering.
The London P.M. gold fix is $1,351.00 versus the previous P.M. fixing of $1,361.00.
