Gold range-bound ahead of US FOMC meeting outcome

Dec 14, 2016 - 3:15 AM GMT
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The spot gold price remained range-bound during Asian trading hours on Wednesday December 14 ahead of the outcome of the US Federal Open Market Committee’s (FOMC) meeting later today.

The spot gold price was recently quoted at $1,160.35/1,160.65 per oz, up $2.20 on the previous close. Trade has ranged from $1,157.95 to $1,161.30 so far.

“The FOMC will continue to dominate short-term [gold] price direction while markets await the Fed’s economic projections and particularly how longer-term interest-rate expectations have changed since the September meeting after the November election result,” James Moore, a Metal Bulletin Research analyst, said.

“Despite the scale of liquidation in recent weeks, [gold] prices have not sold off sharply, which points to underlying buying interest elsewhere in the market. But with speculative exposure still somewhat elevated, there remains the risk of further disinvestment.”

The FOMC meeting will conclude later today and is widely expected to result in the first US rate increase since December 2015.

Market participants will also be interested in the Fed’s economic projections and particularly how longer-term interest-rate expectations have changed since the September meeting, following November’s US presidential election result.

“The consensus expectation remains that the FOMC won’t move its economic forecasts or interest rate projections meaningfully at tomorrow’s announcement or at least until it becomes clear what Donald Trump’s actual fiscal agenda is,” ANZ Research said on Wednesday morning.

In US data released Tuesday, the November NFIB Small Business Index was upbeat at 98.4 – this was the highest level since November 2014 – while November import prices came in as expected at -0.3%.

US data due later today includes core retail sales, PPI, retail sales, core PPI, capacity utilisation rate, industrial production, business inventories and crude oil inventories.

In currencies, the US dollar index fell 0.07% to 100.98 so far today.

In other commodities, the Brent crude oil spot price fell 0.24% to $55.08 per barrel recently.

In equities, the Shanghai Composite eased 0.4% to 3,142.57 so far on Wednesday.

In the other precious metals, the spot silver price increased $0.04 to $16.925/16.945 per oz. Platinum gained $4 to $931/936 per oz, while palladium slipped $0.50 to $725/730 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 4,254 yuan per kg.

(Editing by Kyle Docherty)