MW: Gold prices fluctuate as investors seen sidelined
Copper rises 1% as other metals trade lower
By Claudia Assis and April H. Lee, MarketWatch
SAN FRANCISCO (MarketWatch) -- Gold futures seesawed Monday as U.S. equities opened higher, undercutting early support for the metal on concerns about inflation.
Gold for December delivery lost $1.50, or 0.1%, to $1,204 an ounce on the New York Mercantile Exchange.
Gold posted gains earlier, hitting an intraday high of $1,212.10 an ounce, but has fluctuated in thin trading. "It's a sideways market," said Jeff Christian, a managing director at commodities consultant CPM Group in New York.
"There's enough uncertainty about the state of the world economy that investors are staying aside" and taking a more wait-and-see approach, he added.
The biggest event on the week's calendar is the Federal Reserve's interest-rate decision and accompanying statement on the economy, due Tuesday. Christian expected "business as usual" for Tuesday, with a statement that will deliver a cautious view of the economy and hold interest rates steady.
Then there are those worried stimulus measures by the Fed and other central banks will lead to long-term inflation, a view shared by many die-hard gold investors. Further quantitative easing measures could stoke prices higher, they fear.
The employment report issued at the end of last week showed that private-sector payrolls expanded by only 71,000 during July. Read more about jobs data.
The disappointing report added to fears about the recovery and fueled expectations that the Federal Reserve will take steps to augment an already-accommodative monetary policy -- boosting gold's appeal as an investment safe haven and as a hedge against inflation.
Meanwhile, the latest data on how investors are positioned in the metals market showed a scaling back in exposure to gold but increased exposure toward the rest of the metals complex, analysts at Barclays said in a note to clients Monday.
"Net noncommercial positions in Comex gold remain close to four-month lows as further long liquidation offset short covering activity. Gross long positions are at a four-month low," they said.
Most metals were lower Monday, with copper bucking the trend. Copper for September delivery rose 3 cents, or 0.9%, to $3.37 a pound. Copper ended last week 1% higher, on the heels of a 12% increase in July.
Silver for September delivery retreated 13 cents, or 0.7%, to $18.34 an ounce.
For gold, should the Federal Open Market Committee decide against further action and the dollar strengthens, prices could fall again, Barclays analysts said. Prices likely would be able to garner some support as a result of physical demand ahead of India's wedding season, they said.
The FOMC is scheduled to announce results of its meeting on the economy and interest rates Tuesday at 2:15 p.m. Eastern.
Meanwhile, the dollar index (DXY 80.61, +0.20, +0.25%) , which compares the U.S. unit to a basket of six other currencies, rose 0.2% to 80.57. The SPDR Gold Trust (GLD 117.44, -0.40, -0.34%) , the largest exchange-traded fund backed by gold, declined 0.4% to $117.38 a share.
The ETF's holdings held at 1,282 metric tons on Friday, the latest day for which statistics are available.
