Gold price trades in narrow range ahead of Fed policy meeting
The price of gold has seen little change in today’s trading session so far, with profit-taking continuing to weigh on prices. The precious metal also appears to have suffered downward pressure ahead of the US Federal Reserve monetary policy meeting due to begin later today.
Gold for immediate delivery had slid 37 cents, to $1280.80 an ounce as of 09:19 GMT, to be trading 5.3 percent above its 50-day simple moving average of $1,216.06. The precious metal has now retreated far from the five-month high of $1307.27 hit on Thursday last week, when the European Central Bank announced its quantitative easing programme.
According to FastMarkets analyst William Adams, “The precious metals are correcting having put in strong gains earlier this year”. Bullion has rallied over eight percent since the beginning of the year as concerns over a downturn in global economic growth and political risk saw investors seeking a hedge against uncertainty.
Markets will now be turning their attention to the Federal Open Market Committee’s two-day monetary policy meeting starting today. Traders will be especially looking to tomorrow’s statement by the Fed, due at 19:00 GMT, for any signs as to whether the central bank is moving closer to a hike in interest rates for what would be the first time since 2006.
The Wall Street Journal quoted David Govett, head of precious metals at Marex Spectron, as stating his belief of enough uncertainty on the market to support gold for the time being. “Whilst, I don’t suspect for a minute that the Fed will surprise us with an early rate rise […] the markets will, as always, be on tenterhooks waiting for any sign of wording change to the current en vogue watchword, ‘patience’.”
On the COMEX in New York, gold for February delivery was little changed, up 0.1 percent at $1280.00 as of 09:00 GMT today. Bloomberg cited a note from HSBC Securities analyst James Steel as saying: “In the near term, bullion may continue to consolidate from gains made earlier in the year.”