Gold wedged below $1,100 ahead of Fed meeting outcome
MANILA – Gold steadied at just below $1,100 an ounce on Wednesday, trading not far from a 5-1/2-year low, as investors awaited the outcome of the U.S. Federal Reserve’s meeting for more clues on the timing of this year’s interest rate increase.
Gold has been stuck in narrow ranges this week ahead of the conclusion of the Fed’s policy meeting later in the day. Policymakers are expected to send more signals to the market that a U.S. interest rate increase is certain this year as the economy recovers.
That rate hike, the first in nearly a decade, could happen as early as September, analysts say, suggesting more downside risk for non-interest yielding gold.
“We still remain somewhat cautious about gold over the short-term, and suspect that the dollar could start to push higher over the balance of the week, possibly triggered by Wednesday’s upbeat Fed policy statement,” INTL FCStone analyst Edward Meir said.
“We also do not see any imminent upside price drivers for gold at the moment, with physical, investor and fund demand all being rather uninspiring.”
Spot gold was up 0.1 percent at $1,096.40 an ounce by 0232 GMT.
The metal touched $1,077 last week, its weakest since February 2010, following a selloff in New York and Shanghai as investors cut their exposure on fears of further price declines.
U.S. gold for August delivery was little changed at $1,095.60 an ounce.
Global gold demand shrank to its lowest since 2009 in the second quarter as China poured funds into its now troubled equities market and imports by India dropped to the lowest in five quarters, according to a report by GFMS, a division of Thomson Reuters.
Holdings of the largest gold-backed exchange-traded-fund, New York’s SPDR Gold Trust, were unchanged at 21.87 million ounces on Monday, the lowest since September 2008, following a seven-day slide.
In other metals, spot palladium gained 0.7 percent to $623.22 an ounce and platinum rose 0.3 percent to $984.40, both not far above multi-year lows. Silver was flat at $14.68 an ounce. – Reuters