Gold Little Changed Near 8-Month Low as Fed Ends Meeting
New York (Sept 17) Gold was little changed near an eight-month low in New York as investors waited for the outcome of the Federal Reserve’s policy meeting to gauge the outlook for borrowing costs.
The Fed concludes the meeting today as officials consider the timing of interest-rate increases and whether to revamp their public guidance on the path of borrowing costs. Bullion rose the previous two days, partly as the metal’s 14-day relative-strength index held below 30, signaling to some traders who study charts that prices may be poised to rebound. The gauge was at 30.3 today.
Gold halted a 12-year rally in 2013 as the Fed prepared to reduce the monthly asset purchases. Policy makers have said since March that rates would stay low for a period after it completes the bond-buying program. Bullion is set for the first quarterly drop this year, with the dollar reaching a 14-month high against a basket of 10 major currencies this week.
“In the run up to this evening, I suspect we remain range bound and a bit jumpy,” David Govett, head of precious metals at Marex Spectron Group in London, said in a note today. “Traders are positioned short ahead of this expecting some form of commentary on earlier interest rate rises, so if this does not transpire, then expect a short-covering rally. If it does, the markets should come off.” Short covering refers to closing out bets on lower prices.
Gold for December delivery added 0.1 percent to $1,238.10 an ounce by 7:25 a.m. on the Comex in New York. It fell to $1,226.30 two days ago, the lowest since Jan. 9. Gold for immediate delivery rose 0.2 percent to $1,237.59 an ounce in London, according to Bloomberg generic pricing.
Trading Volume
Futures trading volume was 38 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg show.
There are signs lower prices are stoking demand. In China, the world’s largest gold buyer, volumes for the benchmark spot contract on the Shanghai Gold Exchange reached the highest since June today, the latest data show.
The European Central Bank has cut the main refinancing rate to a record low and said it would buy asset-backed securities to bolster the economy. The People’s Bank of China is injecting 500 billion yuan ($81 billion) into the nation’s largest banks, according to a government official familiar with the matter.
“As the U.S. economy continues to recover and monetary policies in other countries diverge, namely in Europe and China, the dollar will remain strong and put precious metals under pressure,” said Yang Xi, a Hangzhou, China-based analyst at Yongan Futures Co.
Holdings in gold-backed exchange-traded products fell 6.2 metric tons to 1,707.5 tons yesterday, the lowest since October 2009, data compiled by Bloomberg show.
Silver for delivery in December fell 0.3 percent to $18.665 an ounce in New York. Platinum for delivery in October was little changed at $1,366.30 an ounce. Palladium for delivery in December added 0.1 percent to $845 an ounce.
Platinum-group metals are mostly used in vehicle catalytic converters. European car sales rose a 12th consecutive month in August, the Brussels-based European Automobile Manufacturers’ Association said today.
Source: Bloomberg
