Gold price ends narrowly higher as investors await Fed decision

San Francisco (July 26)  Gold futures settled narrowly higher Tuesday, after posting declines over the last two trading sessions, as investors awaited hints from the U.S. Federal Reserve on the timing of the next interest-rate increase.

The Fed will conclude a two-day policy meeting on Wednesday. Although, no monetary-policy moves are expected, its statement will be watched closely for clues to future action.

Gold for August delivery on Comex GCQ6, +0.05%  rose $1.30, or 0.1%, to settle at $1,320.80 an ounce, after tallying a loss of nearly 1% in the last two sessions. September silver SIU6, +0.27%  also added 3.6 cents, or 0.2%, to $19.683 an ounce.

‘Gold is currently entangled in a fierce tug of war with U.S. rate hike expectations and risk aversion from concerns over the global economy.’

Lukman Otunuga, FXTM 

“Gold is currently entangled in a fierce tug of war with U.S. rate hike expectations and risk aversion from concerns over the global economy,” said Lukman Otunuga, FXTM research analyst, in a note.

“Although it is widely expected that U.S. rates will not be increased in July, a hawkish-sounding statement could punish gold further consequently opening a path below $1,308,” said Otunuga. “On the other hand, if concerns over the global economy continue to elevate, then the metal may remain buoyed as investors flock to safe-haven safety.”

For now, gold is searching for direction “as the combination of dollar strength, anxiety ahead of the central bank meeting and lingering Brexit uncertainties keep the metal in limbo,” he said.

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The dollar DXY, -0.13% was trading slightly lower against major rivals. A weaker dollar can support commodities priced in the unit as it makes them cheaper for users of other currencies.

For now, consolidation in gold is likely to continue, according to Sprott Asset Management’s gold team, which said it would “remain buyers on weakness.”

Read: ‘Impending gold production cliff’ may delivery jolt to prices

Looking further ahead, the quarterly data on U.S. gross domestic product and the employment cost index are key, said Naeem Aslam, chief market analyst at ThinkMarkets.

“If these numbers do provide more support for the Fed, then the odds of another rate hike will be even more stronger for this year,” he said. “This could push the gold price lower. However, we still maintain our bullish stance for gold given the number of uncertainties we have.”

Other metals traded on Comex inched higher. October platinum PLV6, +0.87%  rose $10.60, or 1%, to $1,099 an ounce, while September palladium PAU6, +0.17%  added $4.05, or 0.6%, to $692.80 an ounce. September copper HGU6, +0.27% added less than a cent to $2.226 a pound.

Among the exchange-traded funds, the SPDR Gold Trust GLD, +0.42%  rose 0.5% and the iShares Silver Trust SLV, +0.70%  climbed 0.7%. The VanEck Vectors Gold Miners ETF GDX, +3.17% added 2.9%.