Arab Today, arab today gold holds below 1620oz ahead of fed statement
Last Updated : GMT 21:50:13
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Gold holds below $1,620/oz ahead of Fed statement

Arab Today, arab today

Arab Today, arab today Gold holds below $1,620/oz ahead of Fed statement

London - Arabstoday

Gold prices held steady below $1,620 an ounce on Tuesday as investors took to the sidelines ahead of a Federal Reserve policy statement later in the day, in which the bank is expected to outline fresh measures to stimulate US economic growth. A spate of soft US economic data has fuelled speculation the Fed may extend its bond-buying scheme, ‘Operation Twist’, beyond its June deadline, a less extreme step than outright purchases of new securities, known as quantitative easing. Further monetary easing would maintain pressure on long-term interest rates, keeping the opportunity cost of holding gold at rock bottom as well as weighing on the dollar, which would stoke demand for the metal as an alternative store of value. Spot gold was at $1,616.39 an ounce at 1000 GMT against $1,616.60 late on Tuesday, while US gold futures for August delivery were down $7.10 an ounce at $1,616.10. Near-term support for prices is likely to kick in towards $1,613 an ounce, he said, while resistance was seen at $1,635. The wider financial markets were little changed ahead of the announcement. Stock markets in Europe edged down a touch and the euro firmed very slightly in early trade, while a slightly weaker tone to the dollar gave a lift to gold. Bets on more monetary stimulus from the US central bank and action to help shield Spain and Italy were reflected in some markets, however, pushing German Bund futures to six-week lows and pressuring Spanish 10-year yields. Confronted with rising financial strains in Europe, a year-end fiscal showdown in Washington and a sharp slowdown in hiring by US employers, many economists expect the Fed to extend Operation Twist, which is aimed at pushing down longer-term interest rates to shield the still-fragile economy. Stimulus seen A Reuters poll of 49 economists conducted early in June reflected a 45 percent chance the Fed would eventually undertake another round of stimulus, well above the 30 percent chance returned in a similar poll on May 15. “If the FOMC were to decline to hint at further easing, this could undermine gold,” HSBC said in a note. “But even if bullion should drop, we believe the price will hold above $1,600.” From a technical perspective, gold remains supported in the $1,580-$1,600 area, analysts who study past price patterns for clues as to the future direction of trade said. “Gold is still rangebound within the confines of its major 1532.20/1522.48 support zone (September and December 2011 lows) and the 1641 current June peak,” Commerzbank said in a note. “It is quite possible, though, that the current June high at 1641 will be surpassed this week and that the 50 percent retracement of the February-to-May decline and the 200-day moving average at 1668 will be reached before another medium-term down leg rears its head.” The bank said it would retain its medium-term bearish forecast on gold unless two daily closes above the May high at 1672.10 were made. Gold-backed exchange-traded funds have seen buying interest in recent weeks, Reuters data showed, with the largest, New York’s SPDR Gold Trust, already on track for its biggest monthly inflow since February, with holdings up 11.4 tonnes. Appetite for gold in major consumer India was blunted by a persistently weak rupee. Jewellers there are also watching the progress of the monsoon, which could set the tone for demand during the next festive season. Among other precious metals, silver was up 0.2 percent at $28.44 an ounce, while spot platinum was flat at $1,473.15 an ounce, while spot palladium was little changed at $623.53 an ounce.

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