Gold Market Holds Breath as Traders Await Rate Clues From Fed

New York (July 27)  traders are waiting for the Federal Reserve. The metal was little changed in London before the Fed ends a policy meeting later Wednesday. A measure of bullion’s price moves are near the smallest since before the U.K.’s Brexit vote and trading volume for U.S. futures were about 20 percent below the 30-day average for the time of day.

Gold has climbed 24 percent this year, partly as the Fed indicated it would hold interest rates lower for longer. While it’s expected to keep rates unchanged today, traders see a 49 percent chance of an increase by December, up from just 12 percent at the start of the month. Markets will be closely watching for clues on the timing of future moves.

Gold will probably be “range bound in sideways trading” before the Fed announcement, Jonathan Butler, a precious metals strategist at Mitsubishi Corp. in London, said by e-mail. “It could move some way higher if we have some dovish comments from the Fed this evening.”

The metal for immediate delivery was steady at $1,320.16 an ounce by 10:58 a.m. in London, according to Bloomberg generic pricing. It’s 60-day historical volatility is near the lowest since June 23, with price moves narrowing every day over the past week.

Central banks have pledged more easing amid concerns the Brexit fallout will hurt economies. Japanese Prime Minister Shinzo Abe announced plans Wednesday for more than 28 trillion yen ($265 billion) in stimulus, while Bank of England official Martin Weale has said he’s in favor of immediate stimulus.

In other precious metals news:

•Holdings in gold-backed exchange-traded funds fell 4.4 metric tons to 1,996.2 tons on Tuesday, data compiled by Bloomberg show. That’s the lowest level since July 1.

•Silver prices lost 0.1 percent to $19.616 an ounce.

•Platinum added 0.2 percent at $1,096.56 an ounce.

•Palladium was little changed at $688.19 an ounce, after touching a nine-month high on Tuesday.

Source: Bloomberg