Gold Swings Below Five-Week High in London Before Fed Meeting
London (Oct 30) Gold swung between gains and losses below a five-week high in London on speculation Federal Reserve policy makers will maintain stimulus and as physical demand slowed.
The Bloomberg U.S. Dollar Index was little changed after climbing to the highest in almost two weeks before the Fed ends a two-day gathering today. The central bank will pare its $85 billion in monthly bond buying at its March meeting, a Bloomberg News survey of economists on Oct. 17-18 showed. Bullion reached $1,361.93 an ounce on Oct. 28, the highest since Sept. 20.
Gold is set for the first annual drop in 13 years as some investors lost faith in the metal as a store of value. U.S. policy makers last month refrained from slowing stimulus to await further evidence of an economic recovery. The 16-day U.S. government shutdown earlier this month reduced economic growth by 0.3 percentage point this quarter, according to a Bloomberg News survey of economists.
“Markets will keep an eye on the outcome of the Federal Open Market Committee meeting,” Mumbai, India-based AnandRathi Commodities Ltd. said today in a report. “Expectations are wide for the Fed to keep its quantitative easing intact. In Asia, physical demand in this part of the world has shown some signs of weakening recently.”
Gold for immediate delivery added 0.2 percent to $1,348.13 by 9:24 a.m. in London. Prices gained as much as 0.4 percent and fell as much as 0.5 percent. Bullion for December delivery rose 0.2 percent to $1,347.80 on the Comex in New York. Futures trading volume was 38 percent below average for the past 100 days for this time of day, data compiled by Bloomberg showed.
ETP Holdings
Holdings in gold-backed exchange-traded products increased for a second day yesterday, rising 0.1 metric ton to 1,881.8 tons, data compiled by Bloomberg show. Assets reached 1,881.4 tons on Oct. 25, the lowest in more than three years.
Gold is heading for a third monthly gain in four, cutting this year’s drop to 20 percent. Global equities advanced 18 percent this year, reaching the highest since 2008 today. BlackRock Inc. Chief Executive Officer Laurence D. Fink said yesterday it’s imperative that tapering begins as the policy is contributing to “bubble-like markets.”
“Even if not today, tapering will come,” said Lv Jie, an analyst at Cinda Futures Co., a unit of one of four funds in China created to buy bad debt from banks. “That’s weighed on gold for most of this year and we don’t see it changing.”
Silver for immediate delivery gained 0.8 percent to $22.7135 an ounce in London. Palladium rose 0.3 percent to $748.40 an ounce. Platinum rose 0.6 percent to $1,470.30 an ounce.
