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Gold ticks lower on equities, Fed in focus

Published: October 23, 2012 | 7:10 am
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Gold edged lower after equities gave up early gains on Tuesday, although demand from jewellers helped prices rebound from their lowest in more than a month as investors waited on the results of a U.S. Federal Reserve meeting.

Even though the Fed is likely to hold off from new moves at its two-day gathering after taking significant action last month, its policy statement on Wednesday will be closely scrutinised.

Gold eased $5.40 to $1,722.89 an ounce by 0605 GMT after falling to a six-week low around $1,713 on Monday – a level which ignited demand from jewellers and speculators in Asia.

“We are not expecting much, unless there are surprises from the Fed. So I believe gold will still be trading within this band. A lot of investors are also eyeing the outcome of the presidential election in the U.S.,” said Brian Lan, managing director of GoldSilver Central Pte Ltd in Singapore.

“On the local market front, there’s still very positive demand from clients. We see more clients coming to purchase gold, especially whenever there’s a price dip.”

U.S. gold for December was at $1,723.90 an ounce, down $2.40.

The U.S. central bank’s policy-setting Federal Open Market Committee starts its meeting on Tuesday and is scheduled to release a statement on its policy deliberations at around 2:15 p.m. (1815 GMT) on Wednesday.

“Markets could also be positioning ahead of the FOMC meeting as the Fed has previously talked up its capacity to support the U.S. economy, but we are not expecting any signs of fresh stimulus,” ANZ said in a report.

In other markets, Asian shares were lacklustre with the corporate reporting season getting underway in the region, as investors stayed cautious after global shares faltered overnight on weak earning reports and outlook.

The euro held steady against the dollar as expectations that Spain will apply for a bailout helped support the euro in recent weeks, but uncertainty over the timing of such a move has limited its gains.

The physical gold market was subdued after seeing strong demand from top consumer India following a drop in prices on Monday. Premiums were steady in Singapore at 80 cents.

“Perhaps India will buy again if prices don’t move extensively higher. There’s one thing to note though – Indonesia and Thai currencies are strong, so gold has become less appealing as an investment,” said a dealer in Singapore.

In India, demand jumped overnight after a rebound in the rupee cut prices 1 percent during the country’s festival season, which will peak next month with Diwali.

Precious metals prices 0605 GMT

Metal Last Change Pct chg YTD pct chg Volume

Spot Gold 1722.89 -5.40 -0.31 10.17

Spot Silver 32.15 -0.24 -0.74 16.11

Spot Platinum 1599.24 -3.06 -0.19 14.81

Spot Palladium 617.97 -1.63 -0.26 -5.29

COMEX GOLD DEC2 1723.90 -2.40 -0.14 10.03 10137

COMEX SILVER DEC2 32.18 -0.07 -0.22 15.28 2995

Euro/Dollar 1.3043

Dollar/Yen 79.86

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