Prices pare losses after fall in July U.S. consumer confidence
By Myra P. Saefong and Barbara Kollmeyer, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures fell on Tuesday as investors prepared for a key monetary-policy statement from the Federal Reserve due later this week.
Prices, however, pared some of their earlier losses after the U.S. Conference Board reported that the consumer confidence index fell more than expected in July.
Gold for December delivery GCZ3 -0.49% fell $5.60, or 0.4%, to $1,324 an ounce on the Comex division of the New York Mercantile Exchange after Monday’s gain of $7.70, or 0.6%. Prices were trading around $1,320.50 before the U.S. economic data.
The consumer confidence index fell slightly in July to 80.3 from an upwardly revised 82.1 in June, the Conference Board said Tuesday. The decline in the index was sharper than the 81.1 forecast of economists polled by MarketWatch. Downbeat economic data tends to buoy gold’s appeal as a safe-haven investment.
Gold’s moves came ahead of Tuesday’s start of a two-day meeting by the U.S. Federal Open Market Committee, which crafts interest-rate policy. Investors will likely comb the board’s statement Wednesday for any clues about when the Fed will slow the pace of its bond-buying program.
Monetary stimulus targeted to reinvigorate U.S. growth has been considered a pillar of support for gold prices.
The first reading of second-quarter U.S. gross domestic product was also due out Wednesday, followed by Friday’s highly anticipated report on the U.S. job market in July.
As the market approaches the conclusion of the FOMC meeting and the release of monthly jobs data, “we doubt that participants will be too eager to add length and carry significant positions overnight. As such, we expect gold to trade towards the lower end of the $1,300-to-$1,340 range as we approach these key events,” said Standard Bank commodity strategist Marc Ground, in a note Monday.
Ahead of the July Fed meeting, speculative investors sharply increased their net long gold positions in the week to July 23, the third such week of gains, according to analysts at Commerzbank.
Traders expect the FOMC to emphasize an accommodative monetary policy. Though many economists see the Fed as likely to decrease the amount of bond buying at its September meeting, there’s also speculation that tapering will begin near the end of the year or later.
The Fed currently buys $85 billion a month in Treasury and mortgage-backed securities. More data about U.S. economic conditions are due to arrive later Tuesday, including reports on home prices and consumer sentiment in July.
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Standard Bank’s Ground said that as gold approaches — and likely breaks below — the $1,300-an-ounce level, the lower prices will probably lure buyers of physical gold back to the market.
While physical buying has subsided in recent weeks, largely because of higher prices, it’s still “relatively robust” compared with the same time in previous years, he said.
The metals market is one month away from the start of the “season” for gold and silver, when India sees the end of the harvest, said GoldForecaster.com contributor Julian Phillips. Profits from the harvest are then often turned into gold and silver.
“Gold premiums continue to rise in both China and India, indicating the physical gold demand pressure,” he said.
In other metals action Tuesday, silver for September delivery SIU3 -0.75% fell 12 cents, or 0.6%, to $19.75 an ounce.
September copper HGU3 -2.04% was off 6 cents, or 2%, at $3.04 a pound.
October platinum PLV3 -0.69% fell $8.90, or 0.6%, to $1,433.80 an ounce and September palladium PAU3 -1.95% fell $13.15, or 1.8%, to $731.50 an ounce, a day after rising 2.9%.
Myra Saefong is a MarketWatch reporter based in San Francisco. Follow her on Twitter @MktwSaefong.
Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @MWBarbaraKollmeyer. Carla Mozee in Los Angeles contributed to this report.
