WSJ: Gold Steady as Market Braces For Fed Decision
LONDON--Gold prices were stable on the London spot market Wednesday, as the market braced for the latest U.S. decision on interest rates.
The London spot gold price was practically flat at $1,095.70 a troy ounce in morning European trade, according to FactSet. Spot silver was also steady at $14.6400 an ounce.
The bullion market is focused on Wednesday’s release of the latest monetary policy statement from the U.S. Federal Open Market Committee. Any signs that the Fed may move as soon as September would likely lead to gains for the U.S. dollar, and losses for gold prices.
Investors are watching for further affirmation that a rate hike is likely to come this year, a prospect first raised by Fed Chairwoman Janet Yellen during her recent testimony before the U.S. Congress. A return to normal in U.S. markets is bad for gold prices, which usually benefit from uncertainty. As the dollar has strengthened since Ms. Yellen’s appearance, gold has lost about $50 an ounce.
“While the market has priced in the possibility of a rate hike given Ms. Yellen’s testimony, a hawkish policy statement may continue to put pressure on gold,” says James Steel, an analyst at HSBC Securities. “The bullion market’s near-term price direction is likely to be shaped by the upcoming FOMC statement release.”
Meanwhile, data published on Tuesday by GFMS showed that demand for gold is weak, and this may persist for some time.
“Gold demand continues to disappoint and we expect it to remain out of favor among investors given the outlook for sound growth, higher interest rates and muted inflation,” said Carsten Menke, commodities research analyst at Julius Baer. “We remain bearish, with China being the key bullish wildcard.”
Gold prices “may have undershot in the very short-term, pushed down by mounting bearish sentiment and technical selling, [but] we do not see lasting upside from any short-covering rally,” Mr. Menke added.
Platinum and palladium were both slightly higher on Wednesday. Spot platinum was up 0.1% at $987.200 an ounce, while spot palladium rose .04% to $624.20 an ounce.
