Gold steadies as investors await Fed meeting
London (Mar 16) Gold steadied above a three-month low on Monday as the dollar fell against the euro.
Stronger shares and expectations this week’s US Federal Reserve meeting could hint at the timing of any hike in US interest rates kept investors cautious.
Spot gold was down just 0.1% at $1,157.10 an ounce by 10.44am GMT. The metal had fallen for nine consecutive sessions up to Thursday, its longest losing streak since 1973.
It hit its lowest since December 1 on Wednesday at $1,147.10, after strong US jobs data stoked speculation that the Fed would increase rates in June.
US gold futures for April delivery were up $4.80 at $1,157.20/oz.
The dollar fell 0.5% against a basket of leading currencies, mostly due to a stronger euro after Italy’s central bank governor voiced concern about the pace of its fall as the European Central Bank launched quantitative easing.
But investors were mostly looking at the Fed’s two-day policy meet that begins on Tuesday for clues on how soon it could raise interest rates. Higher rates could dent demand for gold, which does not pay any interest.
"Gold has been managing to hold above $1,150 but ... any relief rally is likely to be short lived with plenty of sellers lining up," Deutsche Borse senior analyst Tony Walters said.
"The only thing that could cause shorts to rethink their positions at the moment would be if the Fed didn’t raise rates in June," he added.
"But if the Fed removes ‘patient’ from its minutes then I’d expect more selling."
Investor sentiment towards gold has been bearish. Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.28-tonnes to 750.67-tonnes on Friday.
Hedge funds and money managers reduced their bullish stance in Comex gold and silver for the sixth straight week in the week ended March 10, US Commodity Futures Trading Commission data showed on Friday.
Lower gold prices attracted some bargain-hunters in Asian physical markets, but not in sufficient numbers to boost prices, said traders.
In the second-biggest consumer China, premiums on the Shanghai Gold Exchange increased slightly to $5/oz-$6/oz above the global London benchmark.
Silver was down 0.1% at $15.59/oz, while palladium fell 0.3% at $785.20/oz.
Platinum was up 0.2% at $1,114.70/oz, having fallen to its lowest since 2009 at $1,108.50 on Thursday.