Gold price steady, Fed’s September rate decision looms

Otmane El Rhazi from The Bullion Desk.

Gold prices were trading in a narrow range in the US on Tuesday morning while investors searched for fresh incentives to start the new week.

Gold for December settlement of the Comex division of the New York Mercantile Exchange was last up $1.60 or 0.1 percent at $1,123.0 per ounce. Trade has ranged from $1,114.70 to $1,124.10.

Market participants are for the most part likely to remain on the sidelines at least until next week’s Federal Open Market Committee (FOMC) meeting.

The FOMC members are contemplating whether to raise the Federal Funds rate for the first time since 2006.

“Looking into September, the outlook is far less certain and we are not necessarily sure whether the case for further weakness can be made with the same degree of certainty,” Edward Meir, an analyst at INTL FCStone, said in a note.

“We say this in view of the fact that the Federal Reserve policy decision on the 17 of September will be instrumental in determining trends over the course of the month,” he added.

Elsewhere, the People’s Bank of China (PBoC) lifted its gold reserves last month by $2.6 billion to $61.8 billion, according to an announcement on the central bank’s website. This points to PBoC gold purchases of 16 tonnes, slightly lower than the 19 tonnes it purchased in July.

“A pace of accumulation in the 15-20 tonnes per month range, if that becomes the norm, is somewhat underwhelming relative to prior expectations of Chinese reserve growth,” ICBC Standard Bank analyst Tom Kendall said.

In data, the US NFIB small business index in August at 95.9 was in line with estimates of 96. The labour market conditions  and consumer credit numbers are due for release later today.

Turning to wider markets, Germany’s DAX and France’s CAC-40 were up 2.2 percent and 1.9 percent respectively, while the euro was 0.1 percent softer at 1.1163 against the dollar.

As for other precious metals, Comex silver for December settlement climbed 13.6 cents or 0.9 percent to $14.685 per ounce. Trade has ranged from $14.440 to $14.740.

Platinum for October delivery rose $9.70 to $1,002.10 per ounce, while the most-actively traded palladium contract was the day’s best performer at $593.50, up $16.35.

 

(Editing by Mark Shaw)

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