New York 29/07/2013 – Gold futures climbed Monday but the move has been modest and well within the recent range as timid participants refrain from striking aggressive new positions ahead of the this week’s Federal Reserve policy statement and US payrolls report.
Gold for August delivery on the Comex division of the New York Mercantile Exchange was last up $13.10 at $1,335.00 an ounce. Trade has ranged from $1,322.60 to $1,338.10.
This week, especially its second half, will be exceptionally busy in terms of news flow, with the US FOMC rate decision and the US preliminary second quarter GDP on Wednesday; ECB and the BOE monetary statement and the July manufacturing PMI for China, the eurozone and the US on Thursday; and US July non-farm payrolls and unemployment rate on Friday.
“This was to have been a quiet [Fed] meeting and this should have been such, with the market almost universally convinced that the all-too-often-debated and long-awaited ‘tapering’ would begin in September just after the next FOMC meeting,” Dennis Gartman, editor of the Gartman Letter, said.
“There was a clear consensus that the course of action had been agreed upon, had been communicated to the market, that the process was fully discounted and everyone was comfortable with that notion until the now rather famous [Jon] Hilsenrath article in the Wall Street Journal,” Gartman added. “We are weary of being buffeted about by whim and whisper. We are weary of being tossed about from one rumour to another.”
WSJ Fed watcher Hilsenrath Thursday suggested that the US central bank likely will keep its $85 billion per month bond buying programme (QE3) in place at its July policy meeting but added that the FOMC might decide to revise its forward-looking guidance. Perhaps, the committee might lower the unemployment rate threshold for interest rate hikes to 6.0 percent from 6.5 the previously announced. Following the release of his story, gold and equities spiked, while the dollar plummeted.
“Market participants are clearly biding their time ahead of Wednesday evening’s meeting of the US Federal Reserve, which they hope will provide some clue as to what action the Fed will take next, as there is still uncertainty about the precise timetable for the Fed’s scaling back of its bond purchasing programme,” Commerzbank said.
“Until the Fed’s meeting, in other words, the gold price may well trend largely sideways,” the broker added.
Meanwhile, the CFTC reported that the net Comex speculative position in the week ending July 23 increase by 1.01 million ounces to 3.47 million ounces, compared to the previous week, marking the highest level in five weeks. Gold gross speculative short positions fell for a second week to 16.5 million ounces from 17.0 million ounces a week earlier.
“Short-covering of late is likely a reflection of participants taking a more neutral stance towards gold, particularly in the short-term. Market participants acknowledge the upside risks, given historical seasonal patterns,” UBS analyst Joni Teves said.
“That short positioning had become quite extreme would also have prompted some scaling back, especially ahead of key risk events this week. The anticipation of the FOMC meeting on Wednesday and nonfarm payrolls on Friday is likely to deter large position-taking and result in more subdued market activity in the next few days,” he added added.
In the wider-markets, the euro was near unchanged at 1.3277 against the dollar, while Germany’s DAX and France’s CAC-40 were up 0.17 percent and 0.26 percent, respectively. In Asia, the Nikkei and Hang Seng ended down 3.32 percent and 0.54 percent.
As for the more industrial commodities, light sweet crude (WTI) oil futures for September delivery on the Nymex were up 19 cents at $104.89 per barrel and the most-actively traded Comex copper contract was at $3.1095 per pound, up 0.4 cents.
Comex silver for September delivery was up 35.9 cents at $20.131 an ounce. Trade has ranged from $19.660 to $20.160.
Platinum futures for October delivery on the Nymex were up $13.70 at $1,436.50 an ounce, while the September palladium contract was at $728.55 an ounce, up $4.55.
