Gold prices steady, awaiting Federal Reserve meeting Tuesday
Gold prices remained constant on Tuesday, as investors waited for the US Federal Reserve meeting Tuesday in Washington. Gold prices reached an all-time high Monday of $1,283 an ounce.
Spot gold held steady on Tuesday, after surging to a record for the third consecutive session, as investors await the outcome of a meeting of the
Federal Reserve later in the day. Spot gold was little changed at $1,278.05 an ounce by early Tuesday morning, easing from the all-time high of $1,283.70 hit on Monday.
U.S. gold futures for December delivery stood at $1,279.9. Few analysts expect the Fed to launch a new round of bond buying this week, even as speculation on more quantitative easing has helped push bullion to new highs. Some policymakers worry that more easing could fuel imbalances in the market or
trigger sky-high inflation.
"What we can probably expect is that they won't come out with additional quantitative easing measures, in which case you might see gold retrace some of its recent gains," said Darren Heathcote, head of trading at Investec Australia.
The support level for gold would be around $1,261, he said. Still, the longer-term prospect for gold remains bullish, given the uncertainties in the economic recovery, analysts and dealers said.
In the latest sign of a fragile economic recovery, data showed that U.S. home-builder sentiment remained stuck at a 1-½ year low in September.
"Ultimately, the long term sentiment is bullish because there are uncertainties and people still prefer to keep gold as a hedge," said a Singapore-based dealer.
Bullion is unlikely to fall sharply in the absence of news on any significant improvement in the global economy.
"But if gold dips below $1,260, it might trigger some selling."
The dollar hovered near a five-week low against a basket of currencies on Tuesday with traders cautious ahead of the Fed meeting, lending support to the bullion.
Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 3.647 tons to a 2-month high of 1,304.472 tons on Sept 20. A stronger rupee helped Indian jewellers defy record gold prices, while sale of scrap was limited in other parts of Asia as holders waited for more gains, dealers said.
Indian and Chinese buyers were in the market, while there was light selling from Indonesia, the Singapore-based dealer also said. The Chinese currency strengthened further, with spot yuan CNY=CFXS hitting 6.6998 against the dollar on Tuesday afternoon, breaking through key resistance at 6.7000 for the
first time since the Chinese currency's landmark revaluation in July 2005. [ID:nTST000471]
China's financial markets will be closed from tomorrow for the rest of week due to the Mid-Autumn Festival. Spot silver was steady at $20.67 an ounce below the
2-1/2-year high of $20.99. A bullish target at $21.20 for silver has been shifted to $21.40, despite being in a phase of sideway trade between $20.60 and $21, said Reuters market analyst Wang Tao. [ID:nSGE68K00Z]
Palladium stood at $535 an ounce, leading the precious metals with a 32-percent gain so far this year, compared to gold's 17 percent ascent. China's silver imports in August fell nearly 25 percent on the year, but imports in the first 8 months of the year grew 27 percent. Total platinum imports over the period shot up 62 percent from a year earlier.