By Myra P. Saefong and Barbara Kollmeyer, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures edged higher on Monday, recovering a fraction of the heavy losses made at the end of last week as traders awaited this week’s Federal Reserve meeting.
Gold for December delivery GCZ2 +0.09% advanced $1.50, or 0.1%, to $1,725.50 on ounce on the Comex division of the New York Mercantile Exchange.
“Gold is hanging in a trading range with a slight upward slant with bargain hunters buying ahead of a two-day [Federal Open Market Committee] meeting this week,” said Jeffrey Wright, a managing director at Global Hunter Securities.
The Fed’s FOMC will begin its meeting on Tuesday, with a policy statement set for release on Wednesday. See the Washington calendar.
On Friday, gold futures dropped by more than $20 an ounce, pressured by a stronger dollar after disappointing corporate-earnings and economic news sent investors into safe havens. See Friday’s story: Gold drops over $20 an ounce, loses 2% on week.
However, on Monday, the ICE dollar index DXY -0.07% , which measures the greenback against a basket of six other currencies, eased back a bit Monday, trading at 79.473, down from 79.629 in late North American trading on Friday. Weakness in the greenback provided modest support to dollar-denominated gold prices.
The euro rose against the dollar on relief that Spanish Prime Minister Mariano Rajoy’s Popular Party was able to hang onto power in his home region of Galicia. See: Euro buoyed by relief over regional Spain vote .
Favorable factors
Gold investors have been taking advantage of a short-term dip in gold prices since the metal’s climb above $1,790 in early October, said David Beahm, vice president at precious-metals investment firm Blanchard & Co.
“It is hard to find anyone who does not think that gold is going higher and will remain strong for some time,” he wrote in an email.
“There are a lot of factors that are favorable for gold: central bank’s monetary policies, fiscal cliffs, Middle East uncertainty and the economic problems Europe is facing,” Beahm said. “Each of these factors alone have the ability to move the price of gold upwards, but pairing them all together will push gold toward $1,850 by the end of the year and likely $2,000 by mid-2013.”
Still, at least one broker said gold may find pressure from recently upbeat economic data.
While Friday’s economic data from the U.S. came in on the soft side, it followed a string of upbeat reports last week, notably on the housing market. Deutsche Bank strategists said that the recent “somewhat supportive” U.S. economic data has weighed on gold, “as early signs suggest that economic conditions may be normalizing.” Gold prices could trade in a range over the next couple of months, they said.
“We see a vacuum in terms of monetary action due to upcoming transitions/decisions in government in both the U.S. and China,” the strategists said.
In other metals trading, December silver SIZ2 +0.63% rose 18 cents, or 0.6%, to $32.30 an ounce.
Copper for December delivery HGZ2 -0.59% fell 1 cent, or 0.3%, to $3.63 per pound.
Platinum for January delivery PLF3 -0.57% fell $8, or 0.5%, to $1,607.50 an ounce, while December palladium PAZ2 -0.47% fell 80 cents, or 0.1%, to $622.20 an ounce.
Myra Saefong is a MarketWatch reporter based in San Francisco.
Barbara Kollmeyer is an editor for MarketWatch in Madrid. Sarah Turner in Sydney contributed to this report.
