Gold drifts in monotonous pre-FOMC trade

Otmane El Rhazi from The Bullion Desk.

The gold market flatlined on Tuesday, with most traders inactive ahead of tomorrow’s policy statement from the Federal Open Market Committee (FOMC).

Gold for April delivery on the Comex division of the New York Mercantile Exchange was last down $1.40 at $1,151.80 per ounce. Trade has ranged from $1,151.10 to $1,156.10 in light trade.

“The monotony continues in the precious complex with prices once again moving lower during the day after an Asian rally, which seems to have become the norm for the last few days,” Marex Spectron’s David Govett said, adding that the yellow metal is stuck between $1,145 and $1,165.

“We hope that today and tomorrow’s meeting of the FOMC in Washington will provide us with some form of impetus, but we will have to wait until tomorrow evening to find out,” he added.

The members of the Fed’s policy board are locked in what has become an increasingly public debate on when will be the right time to raise interest rates, which have been near zero since December 2008. The current market consensus is that the first increase will happen sometime in the second half of this year.

“The only debate it seems regarding the FOMC meeting is whether the Fed shall remove the now infamous word ‘patient’ from its post- meeting communique tomorrow,” Dennis Gartman, editor of the Gartman Letter, said.

“One now apparently needs to be a linguist rather than an economist when it comes to measuring Fed policy. The drive for transparency put into effect several decades ago has become perverted and pedantic,” he added.

Elsewhere, German ZEW economic sentiment disappointed at 54.8 and the eurozone final CPI and employment change were as expected at -0.3 percent and 0.1 percent respectively. But ZEW economic sentiment at 62.4 was better than forecast as was the final core CPI at 0.7 percent.

In wider markets, the dollar was 0.52 percent softer at 1.0624 against the euro, while Germany’s DAX and France’s CAC-40 were down 1.37 percent and 0.72 percent respectively.

Light sweet crude (WTI) oil futures on the Nymex were down 98 cents, or 2.23 percent, at $42.90 per barrel, while the May Comex copper contract was at $2.6145 per pound, down 5.3 cents.

As for the other precious metals, Comex silver for May delivery was down 9.7 cents at $15.520 per ounce. Trade has ranged from $15.480 to $15.645.

Platinum for April delivery on the Nymex was down $5.70 at $1,102.20 per ounce, while the most-actively traded palladium contract was at $775.30, a drop of $4.80.

(Editing by Mark Shaw)

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