Gold little changed before conclusion of FOMC meeting

Otmane El Rhazi from The Bullion Desk.

Gold prices traded in a tight-range this morning ahead of the conclusion of the Federal Open Market Committee (FOMC) meeting.

Gold for August delivery on Comex division of the New York Mercantile Exchange fell $2.20 or 0.2 percent to $1,178.60 per ounce. Trade has ranged from $1,177.10 to $1,181.70.

Investors have shifted their attention to the conclusion of today’s FOMC meeting, after which Federal Reserve chair Janet Yellen will hold a press conference and participants will attempt to glean any clues on when the US monetary policy will begin to normalise rates.

“We do not expect the Fed already to increase interest rates this evening, for the data available so far do not show clearly that the economic weakness of the first quarter has been overcome,” Commerzbank said. 

If Yellen – based on recent positive US data, particularly wage increases and housing development – suggests raising rates more than once in this calendar year, it could weigh on the precious metals complex considerable.

“However, if Yellen were to indicate that two rate hikes will be made during the course of the year, this could cause the US dollar to appreciate noticeably and put pressure on the gold price,” the bank added.

Elsewhere, the ongoing negotiations between Greece and the International Monetary Fund (IMF) remain relevant to investors as a pivotal meeting will take place on Thursday. After talks degenerated over the weekend, the Mediterranean country has until the end of the month to repay 1.6 billion euros to the fund or face a possible exit from the bloc.

“Investors are just not interested in gold and physical demand is weak – it looks as though gold will languish around in low ground until investors once again need a safe haven,” FastMarkets’ William Adams, said. “Overall, we expect the Greece problem is escalate in the days and weeks ahead, which may well prompt more interest in gold. Needless to say, gold could lose what little support it has should a solution be found.”

In eurozone data today, final CPI year-over-year in May was in-line with forecasts of a positive 0.3 percent as was the core number of 0.9 percent.

In world markets, Germany’s DAX and France’s CAC-40 were down 0.5 percent and 0.9 percent respectively, while the euro was 0.2 percent stronger at 1.1270 against the dollar.

As for the other precious metals, Comex silver for July delivery was up 5.5 cents at $16.020 per ounce. Trade has ranged from $15.885 to $16.045

Platinum futures for July delivery on the Nymex were down $5.10 at $1,074.70 per ounce, while the most actively traded palladium contract was at $731.45 per ounce, down $1.35.

(Editing by Tom Jennemann)

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