IV:Gold briefly climbs above USD1,400 on Fed stimulus outlook
Investing.com - Gold futures were little changed on Monday, after briefly climbing above the key USD1,400-level as investors awaited further clues from the Federal Reserve as to when the central bank will start cutting back on its easy money policies.
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 USD1,395.90 a troy ounce during European morning hours, little changed. The December contract settled up 1.8% at USD1,395.80 a troy ounce on Friday.
Futures held in a range between USD1,391.10 a troy ounce, the daily low and a session high of USD1,406.50 a troy ounce, the strongest level since June 7.
Gold futures were likely to find support at USD1,351.90 a troy ounce, the low from August 20 and resistance at USD1,417.45, the high from June 7.
Gold rallied nearly 2% on Friday after the Commerce Department said new home sales fell by 13.4% in July, the largest decline in more than three years. Analysts had expected U.S. new home sales to fall by 2% last month.
The weak data sparked concerns over the strength of the recovery in the housing sector and fuelled speculation over whether the Fed will start to scale back its USD85 billion-a-month asset purchase program in September.
The minutes of the Fed’s July meeting published last week showed that policymakers remain divided over the timing of a possible reduction, with almost all committee members agreeing that a change in the asset purchase program was not yet appropriate.
The minutes described recent U.S. economic data as “mixed”, indicating that plans to taper could be pushed back if the economy was to weaken.
The central bank is scheduled to meet September 17-18 to review the economy and assess policy.
Market players were looking ahead to U.S. data on durable goods orders later in the day.
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 has rebounded nearly 16% since hitting a 34-month low of USD1,180.15 a troy ounce on June 28.
Despite recent gains, the precious metal is still on track to post a loss of approximately 17% 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 rallied 1.55% to trade at USD24.15 a troy ounce, the strongest level since May 6.
Silver’s gains accelerated after prices broke above key resistance levels close to the USD24-level, triggering a flurry of automatic buy orders amid bullish chart signals.
Meanwhile, copper for September delivery rose 0.7% to trade at USD3.380 a pound, the highest since June 5.
