Gold is trading at 1117.30 this morning with little direction and extremely low volume as traders sit tight ahead of the FOMC meeting minutes due in the
Gold was stuck in a narrow range on Wednesday as investors waited for the minutes of the Federal Reserve’s meeting last month for clues on whether the US central bank might raise interest rates next month.
Bullion has found some support above $1,100 an ounce after last week’s strong recovery away from a 5-1/2-year low reached in late July, helped by the uncertainty that followed China’s shock devaluation of its currency.
“Whether this will be enough to keep the upward momentum going remains to be seen as we head into the Fed meeting whereby the central bank will likely raise rates,” INTL FCStone analyst Edward Meir said.
A recovery in the housing sector, a strengthening job market and other upbeat economic signals suggest the U.S. central bank is on track to raise interest rates this year. But some analysts say it might adopt a gradual approach after the first increase, following China’s yuan devaluation last week. The imminent increase in U.S. interest rates will be the first since 2006 and it has dimmed the appeal of non-interest-bearing assets such as gold.
Industrial and base metals were all trading at the bottom of their ranges on pressures from China. Copper is down 3 points at 2.282 in the morning session while silver diverged from gold. Base metals slipped in Asia trade as concerns about the recovery in Japan after weak trade data followed a declining GDP report. US lead and zinc scrap prices are buckling under the weight of lower London Metal Exchange prices, with tags inching down amid generally steady demand. Fears of slowing growth in China have been the main culprit behind the bear market in commodities over the last couple years. Metals were also weighed down by a stronger dollar after upbeat US economic data releases renewed expectations of a rate hike by the US Federal Reserve by September. Prices of commodities, particularly of base metals, have been bearish for some time on account of lower Chinese demand and the possibility of a US interest rate hike. Metals today likely to trade in range bound manner as nothing major fundamental trigger or data to be found which influence more on metals side.