ET:Gold marks time ahead of Fed meet, stimulus eyed
SINGAPORE: Gold was little changed on Tuesday, holding near a five-week high, as traders shied away from taking big bets ahead of a key Federal Reserve meeting beginning later in the day.
The Fed starts its two-day policy meeting on Tuesday and is expected to release a statement on Wednesday afternoon. Markets are watching closely for clues on when the US central bank will start dialling back its $85 billion monthly bond purchases.
"The (economic) numbers coming from the United States are pretty mixed. Chances are there won't be any major announcement," said Ng Cheng Thye, head of precious metals at Standard Bank in Singapore.
The Fed has said that the bank would likely begin reducing its stimulus later in 2013 and halt it altogether by mid-2014. But it has left open the option of changing stimulus exit plans if the economic outlook worsens.
Data on Monday showed that contracts to purchase previously owned US homes fell in June, retreating from a more than six-year high, although the US labour market has shown signs of strength in recent weeks.
Spot gold fell 0.2 per cent to $1,324.44 an ounce by 0659 GMT. It fell 0.5 per cent on Monday as investors took profits after three weeks of gains.
The metal has fallen more than 20 per cent this year on fears of an end to easy central bank money and sharp outflows from gold-backed exchange traded funds, but prices have recovered from a three-year low hit in June.
Prices touched a five-week high of $1,347.69 an ounce on July 23 and July 24 last week.
"Since the prices have come back $150 from their low, demand has slowed down. In fact we are seeing some small de-hoarding from the Far East; it's not a lot but they are definitely taking some profit at these price levels," said Standard Bank's Ng.
Prices on the Shanghai Gold Exchange have fallen to about $20 an ounce over London spot prices from over $25 last week.
"Physical market activity seems to have lightened off over the past week as the market has moved above $1,320," ANZ analysts wrote in a note. "Shanghai premiums yesterday were around $5 below the previous week, which suggests the market may find it tough to hold flat price rallies."
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