Gold price consolidates around $1290 as Fed decides on interest rates
The price of gold has retained most of its gains so far in today’s trading following its best session in a week after a round of poor US data saw investors seek a safe haven. Markets will now await the conclusion of the Federal Reserve’s monetary policy meeting later today for cues on direction.
Gold for immediate delivery had slid $3.57, or 0.28 percent, to $1288.29 as of 09:19 GMT, to be trading 5.7 percent above its 50-day simple moving average of $1,218.32. Yesterday, the precious metal advanced 0.9 percent, the most since 20 January, after an unexpected fall in US durable-goods orders triggered a selloff in stocks and demand for safe havens rose.
Market participants now await a statement from the Federal Open Market Committee, scheduled for release at 19:00 GMT, which will mark the conclusion of the central bank’s two-day policy meeting, for any clues as to whether the central bank is moving closer to raising interest rates for what would be the first time since 2006. According to some analyst, a likely dovish stance from the Fed may support zero-yielding assets such as gold.
Reuters cited a note from INTL FCStone analyst Edward Meir as saying: “Our view is that the central bank will likely pay greater attention to the slowing global macro picture and reinforce its ‘go-slow’ approach on interest rates”.
On the COMEX in New York, gold for February had slid 0.29 percent, or $3.80, to $1,288.20 as of 09:05 GMT. According to Phillip Futures investment analyst Howie Lee, bullion is consolidating around $1,290 ahead of the central bank’s release, which is unlikely to offer any surprise. In his view:
“I think it’ll be mostly a non-event. The Fed will probably stick to the status quo and if that proves to be true, then gold should continue to hover between $1,270 and $1,290 in the near term”.