IV:Gold swings between small gains and losses with Fed in focus
Investing.com - Gold futures swung between small gains and losses on Wednesday, amid ongoing uncertainty over the timing of the Federal Reserve’s widely expected reduction in monthly bond purchases.
Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would end its quantitative easing program sooner-than-expected.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,321.00 a troy ounce during European morning hours, up 0.05%.
Gold prices held in a tight range between USD1,315.40 a troy ounce, the daily low and a session high of USD1,324.60 a troy ounce.
Gold futures were likely to find support at USD1,282.80 a troy ounce, the low from August 8 short-term resistance at USD1,347.85, the high from July 23.
The December contract settled down 1% at USD1,320.50 a troy ounce on Tuesday after U.S. retail sales data reinforced the view that the economic recovery is strong enough for the Fed to begin tapering its USD85 billion-a-month asset purchase program later this year.
The Commerce Department said that retail sales rose for the fourth successive month in July, rising 0.2%, while core retail sales, which exclude automobile sales, rose at the fastest pace in seven months, climbing 0.5%.
Market players now looked ahead to U.S. data on inflation, industrial production, housing starts and consumer confidence later in the week.
Gold traders have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Fed to reduce its bond purchases.
Any improvement in the U.S. economy was likely to reinforce the view that the central bank will begin to taper its bond purchase program in the coming months.
The precious metal is on track to post a loss of approximately 21% on the year amid concerns the Fed will start to unwind its stimulus program by the year's end.
An exit from the stimulus would deal a heavy blow to gold, which has thrived on demand from investors who buy gold to hedge against the inflationary risks of loose monetary policies.
Elsewhere on the Comex, silver for September delivery was little changed to trade at USD21.35 a troy ounce, while copper for September delivery dipped 0.2% to trade at USD3.311 a pound.
In the euro zone, preliminary data released Wednesday showed that France’s economy expanded 0.5% in the three months to June, following two consecutive quarters of contraction. Economists had forecast growth of 0.2% quarter-on-quarter.
A separate report showed that Germany’s economy expanded by 0.7% after growing 0.1% in the first quarter. Economists had forecast quarter-on-quarter growth of 0.6%.
Brussels was to release preliminary data on euro zone gross domestic product later in the trading day, amid expectations that the report would show a modest return to growth.
Europe as a region is third in global demand for the industrial metal.
