Gold drifts ahead of US FOMC meeting

Dec 13, 2016 - 3:28 AM GMT
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The spot gold price drifted during Asian trading hours on Tuesday December 13 ahead of the US Federal Open Market Committee’s (FOMC) two-day meeting starting later today.

The spot gold price was recently quoted at $1,163.00/1,163.30 per oz, up just $0.10 on the previous close. Trade has ranged from $1,161.60 to $1,165.05 so far.

Gold had returned to above $1,160 per oz after buying interest emerged from Asia after the metal fell below that level on Monday, while the rally seen in global equities paused, Commerzbank said late on Monday.

Volatility remains a key theme ahead of the FOMC meeting, the bank added.

The market is largely expecting the FOMC to lift rates during the meeting – this outcome is now largely factored in markets, Chris Beauchamp, a market analyst at IG, said.

“Unless [Chair of the US Federal Reserve] Janet Yellen comes out extremely hawkish, pencilling in more rate hikes next year than the market expects, then we could see further US dollar weakness in the near-term, perhaps moving back below the 100-mark,” he said.

The US dollar index was recently at 101.00 on Tuesday, up 0.07% from Monday’s close, but down from a high of 101.79 reached on Monday – the highest since November 30.

In data released Tuesday, China’s industrial production grew 6.2% year-on-year in November, close to expectations of 6.1%.

Fixed asset investment in January-November grew 8.3% year-on-year, in line with market consensus, while retail sales rose 10.8% year-on-year in November, beating the forecast of 10.2%.

Other key economic data due later today includes the German ZEW economic sentiment, and NFIB small business index and import prices from the US.

In other commodities, the Brent crude oil spot price rose 0.29% to $55.77 per barrel so far on Tuesday.

In equities, the Shanghai Composite slipped 0.69% to 3,131.21 so far today.

In the other precious metals, the spot silver price increased $0.045 to $17.105/17.125 per oz. Platinum was unchanged at $929/934 per oz, while palladium rose $2 to $723/728 per oz.

On the Shanghai Futures Exchange, gold for June delivery was recently at 268.80 yuan ($39) per gram, and the June silver was at 4,275 yuan per kg.

(Editing by Kyle Docherty)