The gold price was confined to a tight range on Tuesday morning amid low volatility and ahead of the FOMC meeting that starts today.
Spot gold was last at $1,183.50/1,184.30 per ounce, down $1.60 on Monday’s close and trading in a $6 intraday range. Silver was one cent at $16.02/16.07 lower but though looks susceptible to falling below support at $16.
“The precious metals are generally weak – gold prices are holding up better than the rest although silver’s support line is holding for now,” FastMarkets analyst William Adams said.
Currency markets are stagnant, with very few economic announcements so far today to drive sentiment. Against the dollar, the euro was up 0.15 percent at 1.1293, the yen 0.11 percent at 123.54 and sterling 0.1 percent at 1.5612. In equities, most European indices have edged into negative territory.
The German ZEW economic sentiment number may add some volatility into the market – should there be any surprises – as will US housing starts this afternoon but largely the market appears quiet for now as participants wait for more news on Greece and this week’s Fed meeting.
“We still would rather watch the action, especially in gold, from the side-lines for a few days longer, as we are quite concerned about the Greek situation. Considering that no eurozone country has ever defaulted on its debt, we are in uncharted territory,” INTL FCStone’s Ed Meir said in a note.
Despite another meeting in Brussels on Sunday, a deal on Greece has not been reached. Talks between the country and its creditors broke up after less than an hour, once again raising concerns of Athens being unable to repay 1.6 billion euros owed to the International Monetary Fund by the end of this month.
Thursday’s eurogroup meeting is now being proposed as the next opportunity for negotiations, though this latest setback puts the country one step closer to a default that may seal an exit from the bloc.
“What is making things equally confusing is the range of arguments that could be marshalled in favour of either a doomsday European scenario or a generally positive outcome, with each holding entirely different ramifications for gold,” Meir added.
In the near term, the metal may be subject to risk on/off plays should anything concrete emerge from the negotiations, MKS’ Samuel Laughlin said.
Elsewhere, outflows continued in the world’s largest gold-backed ETF – the SPDR Gold Trust – with holdings down 0.3 percent at 701.9 tonnes, the lowest in seven years.
Many participants will be looking to this week’s Fed meeting for direction. The current consensus is for the first increase in interest rates in September; data so far for the second quarter suggests a rebound that may sway the Fed into altering the language of its statement.
In the PGMs, platinum is trading just above six-year lows at $1,086/1,091 per ounce, up $3, while palladium climbed $6 to $736/741.
(Editing by Mark Shaw)
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