Gold Trading Flat On Friday

Gold opened on Friday morning flat at 1144.30 after recovering on Thursday’s earlier losses. Late in the session the metal was trading in the red, and immediately after the release of the FOMC minutes gold climbed to touch 1150 for a short period.  Federal Reserve meeting minutes showed policymakers at the U.S. central bank were unsettled by signs of a global economic slowdown but that their outlook was not “materially altered”.

The Fed thought the economy was close to warranting an interest rate hike in September but policymakers decided it was prudent to wait for evidence a global economic slowdown was not knocking America off course, minutes from the Sept. 16-17 meeting showed.

Gold gained $30 an ounce during China’s holiday between Oct. 1 and Oct. 7, while silver gained about $1.50 in the same period, as the dollar weakened on sluggish U.S. economic data. However, prices fell from near two week highs and silver slumped 3 percent on Thursday, as Chinese investors sold the precious metals to take profits on return from a week-long holiday. Gold turned lower on Thursday in a dramatic turnaround after Federal Reserve meeting minutes showed policymakers at the U.S. central bank were unsettled by signs of a global economic slowdown but that their outlook was not “materially altered”.

The Fed thought the economy was close to warranting an interest rate hike in September but policymakers decided it was prudent to wait for evidence a global economic slowdown was not knocking America off course, minutes from the Sept. 16-17 meeting showed.

“Gold’s initial rally above $1,150 and subsequent modest sell-off reflects a deep ambivalence in the market regarding the possibility of the December Fed rate hike,” said Tai Wong, director of base and precious metals trading for BMO Capital Markets

“At first, gold reacted positively to the September Fed minutes which indicated that the FOMC would look for ‘further improvement’ in the labor market, confirming that the outlook had not ‘deteriorated significantly’ before raising rates.”

A delayed rate rise could support gold in the near term. U.S. gold futures for December delivery settled before the minutes were released, down 0.4 percent at $1,144.30 an ounce. Silver took its cues from gold to hold at 15.75 while platinum gained almost $10 to 960.30.

Copper soared 36 points on Friday morning to trade at 2.385 as Chinese buyers pushed up prices. Base metals on the LME traded negative yesterday on profit booking at higher levels although dollar index weakened by around 0.2 percent in yesterday’s trade. LME Copper prices declined by 1 percent on Thursday to close at $5135 per tonne, under pressure from fund selling as worries about slowing demand growth in China outweighed falling stocks and output cuts.

Prices were weighed down by renewed concerns about demand growth in China, which accounts for nearly half of global copper consumption. The impact of the country’s economic slowdown was highlighted by data showing German exports to China for August marked their sharpest fall since the global financial crisis.