Gold price steadies as market awaits clarity on Fed policy
London (Sept 9) Gold hovered near three-week lows on Wednesday as stocks strengthened and the dollar firmed, and remained hemmed into a narrow range ahead of next week’s US Federal Reserve meeting.
The gold market will be closely watching the US central bank’s next policy statement, due on September 17, for clues on the timing of a US interest rate hike.
Gold has benefited in recent years from ultra-low rates, which cut the opportunity cost of holding bullion while holding the dollar in check. Expectations for a rise in rates has helped push the metal down 5% this year.
Spot gold was at $1,121.35 an ounce at 9.40am GMT, little changed from $1,121.40 late on Tuesday, while US gold futures for December delivery were flat at $1,121.
The metal is likely to remain rangebound until more clarity emerges on US rates, Citi analyst David Wilson said.
"There is a little bit more risk appetite, but people are still holding onto gold," he said.
"There is still an outside chance we could have a rate hike in September, which wouldn’t be good for gold."
Global shares surged on Wednesday, led by the biggest daily gains in Japan for seven years, helping lift the dollar and oil prices as the prospect of more stimulus from China soothed investors rattled by recent market turmoil.
Gold has failed to attract strong investor interest as a safe haven, despite the recent weakness in stocks due to worries over the Chinese economy, showing that the metal is struggling to find direction outside US monetary policy, analysts say.
"In the run-up to the Fed’s meeting next week, market participants are likely to be exercising restraint, so we are unlikely to see any pronounced price fluctuations in one direction or another," Commerzbank said in a note.
The physical gold market has been mixed, providing little support to global prices.
Gold prices in India are at a discount to the global benchmark for the first time since mid July as a weak monsoon put a damper on demand in the world’s second-biggest consumer.
In top consumer China, premiums edged up on the Shanghai Gold Exchange to about $5/oz on Wednesday morning, from last week’s $4.
Among other precious metals, silver was down 0.5% at $14.74/oz, while platinum was up 0.2% at $1,005/oz and palladium was up 0.1% at $585.50/oz.