Gold Trigger At $1100

Gold added $1.70 in the Asian session to trade at 1111.00 remaining well below its monthly trading average. Traders seem unsure of what to make ahead of the Federal Reserve meeting next week. The odds continue to shuffle between an increase or a delay. No one knows for sure. Gold finished higher on Thursday, halting a string of losses that took prices to their lowest level in a month, as investors continued to look for hints on the outcome of the Federal Reserve’s policy meeting next week.

U.S. gold, also headed for a third weekly dip, was trading at $1,111. “It is hard to get too enthusiastic about gold currently,” said HSBC analyst James Steel. “We are likely to see sideways trading until the FOMC,” he said referring to the U.S. Federal Open Market Committee meeting.

Physical demand, which has provided little support for prices, could pick up if gold drops below $1,100, he said.

Traders are awaiting the Federal Reserve’s next policy statement on Sept. 17 for clues on the timing of a U.S. interest rate rise, before taking any big positions in gold. Concerns over slowing growth in China, mixed economic data and volatility in financial markets have increased uncertainty about the timing of any U.S. interest rate increase, which had been expected as early as this month.

Data on Thursday showed the U.S. labour market appeared to gain momentum in early September as fewer Americans filed for unemployment benefits, but weak inflation pressures may complicate the Fed’s decision.

Among other precious metals, silver was headed for a weekly gain, while platinum was set for a third weekly dip. Palladium has been the best performer in the group this week, snapping three weeks of losses to rise 3 percent. Silver took cues from gold to add 55 points to reach 14.70 while the other precious metal, platinum added $4.25 to reach 985.65 well off its $1000 level earlier this week.

Gold could see further weakness leading up to the Federal Reserve policy meeting on Sept. 16-17, traders said. Prices could head back towards July lows as bullion broke through some key technical levels in Wednesday trade, said analysts at ScotiaMocatta. The July low of $1,077 for spot gold was the weakest since February 2010. “The $1,100 level should prop up gold during Asian trade today as physical names look to snap up the metal at these levels,” said MKS Group trader Sam Laughlin.

Industrial and base metals remain in the green with copper adding 4 points this morning trading well above its September trading range. Copper had fallen as low as 2.26 just a week ago and now is trading at 2.457. Copper had its longest rally since June on speculation that output cuts by miners including Glencore will tighten supplies just as demand rebounds.

Glencore this week announced the year’s biggest reductions to production. Miners are trimming output while China, the world’s largest metals consumer, approved railway projects totaling about $US11 billion that may spur new demand. Supplies of copper held in Chinese warehouses not monitored by exchanges dropped to the lowest in 21 months.