Gold was steady around $1,200 on Tuesday morning ahead of the Federal Open Market Committee (FOMC) statement on Wednesday.
The spot gold price of $1,200.8/1,201.5 per ounce was largely unchanged from the previous close and has held within a narrow intraday range of $1,199.3-1,203.8 so far.
“The precious metals have been under pressure but we have expected scale-down buying/underlying support – that seems to have been found now. Yesterday’s rebounds were slow in coming, considering the weaker dollar, but if the dollar breaks support we would expect the rallies to be underpinned further,” FastMarkets head of research William Adams said.
Gold found support yesterday from worse-than-expected US economic data, rallying above $1,200 from a low of $1,178.70, while the dollar index fell to a three-week low at 96.63. The dollar was last around 1.0884 against the euro.
The US flash services PMI missed consensus at 57.8, though the number still suggests a sustained upturn in US service sector output. But it follows poor durable goods orders data on Friday at -0.2 percent.
“Market participants are relating the recently slippage in the dollar to disappointment in the US economic performance. There are several potential important benchmarking events ahead for the dollar with the first reading on first-quarter GDP and the FOMC meeting [on Wednesday],” HSBC said in a note.
“A better-than-expected GDP reading may weigh on gold and conversely a lower-than-expected reading may provide support for bullion,” it added.
The FOMC will release a statement on Wednesday, which will be read closely for clues on its thinking of normalising monetary policy, after its two-day meeting. While higher interest rates are not yet expected, the developing inflationary environment may well prompt comments from Fed chair Janet Yellen.
Inflation and slack in the labour market are the two factors that will guide the Fed’s hand in normalising monetary policy.
US data today includes house price index, consumer confidence data and the Richmond manufacturing index.
In Europe, markets benefitted from news of the Greek government reshuffling their negotiating team, side-lining finance minister Yanis Varoufakis after he was heavily criticised at a summit of eurozone finance ministers last week for a lack of progress in critical reforms needed to secure funding. Greece could default on its debts unless a deal can be brokered with its creditors.
According to data from the International Monetary Fund, central banks made net purchases of around 33 tonnes of gold in March. The biggest purchaser was the Russian central bank, which topped up its gold reserves by 31 tonnes, Commerzbank noted.
In the other precious metals, silver was largely unchanged at 16.36/16.40 per ounce. Platinum at $1,138/1,143 was down $2 as was palladium at $773/778.
(Additional reporting by Ian Walker, editing by Mark Shaw)
The post Gold price steady around $1,200/oz, all eyes on FOMC appeared first on The Bullion Desk.
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