The gold price was little-moved in morning trading on Wednesday, with much of the market continuing to sit on the sidelines ahead of the conclusion of the Federal Reserve’s last monetary policy meeting before the summer break.
Spot gold was last up $2.10 on the previous session at $1,096.80/1,097.60 per ounce, having traded within an intraday range of just $5 so far.
Today, much of the market’s focus will be on the outcome of the FOMC monetary policy meeting, which is due to conclude later this evening with a press conference to discuss the current state of the US economy.
A rate hike is unlikely, but investors will look for any information in regards to a possible September hike after an increasingly hawkish tone has emitted from the Federal Reserve.
“If a rate hike in September were to be signalled, this would doubtless drive up the US dollar, which would ultimately weigh on the gold price, for the Fed Fund Futures have so far only priced in roughly 40 percent of a rate hike in September,” Commerzbank’s Carsten Fritsch said in a note this morning.
“As soon as the Fed begins raising interest rates, one major uncertainty will be removed for the gold price, thus allowing it to gain,” it added.
FastMarkets analyst Boris Mikanikrezai also believes that given the strong bearish sentiment within the precious metals complex at the moment, the short-term risks are slightly skewed to the upside.
“The Fed is unlikely to make significant changes in its July monetary policy statement in so far as information received since the June FOMC meeting is not likely to be sufficient to prompt FOMC members to change their assessment of appropriate monetary policy,” he said. “As such, precious metals could witness a relief-rally amid short-covering in the short-term,” he added.
Currently, the US currency remains relatively weaker at 1.1062 against the euro, not far from the two-week lows seen earlier this week at 1.1129. European indices have all opened in positive territory this morning, following gains in Asian stocks earlier today. The Shanghai Shenzhen CSI 300 Index in particular closed up 3.13 percent.
In gold-centric news, according to figures from the US Mint, 161,500 ounces or around five tonnes of gold coins have been sold so far in July. The number is more than double the amount sold in June and the largest amount seen since April 2013.
However, as Commerzbank also notes, this is not enough to offset the current outflows in ETFs. “The ongoing ETF outflows are also preventing any increase in the gold price,” it said.
In data, the GFK German consumer climate number at 10.1 was as expected, as were Japanese retail sales, rising 0.9 percent. Still to come from the US this afternoon will be pending home sales, crude oil inventories and the federal funds rate.
In other metals, silver was last up three cents at $14.67/14.72 per ounce, while palladium was up $7 at $623/628 and platinum was up $9 at $985/990.
(Editing by Martin Hayes)
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