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Sep 17, 2019

Futures & Commodities | Gold | Gold Price Report: Gold edges higher as investors await Fed policy decision

3 minutes - Source: CNBC




GP: Gold bars 180809
Gold bars sit in a vault at the Perth Mint Refinery, operated by Gold Corp., in Perth, Australia, on Thursday, Aug. 9, 2018.
Carla Gottgens | Bloomberg | Getty Images
Gold rose on Tuesday, propped up by expectations for an interest rate cut by the Federal Reserve, but traded within a relatively narrow range as investors awaited further clarity on the U.S. central bank’s stance on future monetary policy.
Spot gold was trading 0.5% higher to $1,505.26 per ounce.  U.S. gold futures rose 0.1% to $1,513.20 an ounce.
“What you have is traders positioning in gold right now trying to prep themselves for the Fed meeting,” said Michael Matousek, head trader at U.S. Global Investors.
The Fed is widely expected to announce a rate cut when it concludes a two-day policy meeting on Wednesday. It would be the central bank’s second such cut after lowering rates in July for the first time since the 2008 financial crisis.
A Fed rate cut this week could put pressure on the Bank of Japan to ease policy on Thursday.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.
“If the Fed underwhelms, or doesn’t cut rates, you’d probably see a good drop in gold. If they do come out and surprise everybody by cutting 50 bps (basis points) instead of 25, you might see a good pop in gold,” Matousek added.
On Monday, gold rose more than 1% before settling 0.6% up for the day after attacks on oil facilities in Saudi Arabia over the weekend intensified worries about stability in the Middle East, prompting U.S. President Donald Trump to apply more pressure on the Fed to lower rates.
The attacks likely will spur more safe-haven demand in the near term, Jim Wyckoff, senior analyst with Kitco Metals, said in a note.
“The U.S. and Saudi Arabia are not likely to just sit on their hands, which will keep anxiety in the world marketplace.”
Meanwhile, equity markets were lower, with investors remaining noncommittal ahead of the Fed’s decision and the next round of U.S.-China trade talks on Thursday.
Gold prices have climbed nearly 19%, or more than $200, since touching a 2019 low of $1,265.85 in early May, supported by an increasingly dovish stance from major central banks, escalation in the U.S.-China trade war and Middle East tensions.
Elsewhere, silver was up 0.8% at $17.99 an ounce and platinum rose 0.5% to $941.71.
Palladium fell 0.2% to $1,601.72 after touching a record high of $1,626.81 in the previous session.

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