Gold held steady in Asian trading on Monday as investors awaited indications from a key US Federal Reserve meeting later this week on the outlook for the central bank's bond buying programme.
The Fed meets on June 18-19 against a backdrop of stronger-than-expected
data on US retail sales and the job market, with markets looking for
clues to any tapering of its economic stimulus programme.
"The markets are a little bit fatigued at the moment," said Victor
Thianpiriya, commodities analyst at Australia and New Zealand Banking
Group. "They are still looking for direction from the Fed meeting.
That's clearly the big driver this week."
Spot gold rose 0.02 percent to $1,390.41 an ounce by 0319 GMT. Bullion
closed up about 0.5 percent for the week on Friday helped by strong
demand for coins and bars, a pullback in U.S. stocks and rising tensions
in the Middle East.
US gold rose USD 2.40 to USD 1,390.
Markets have been volatile since Fed Chairman Ben Bernanke said last
month the bank could scale back its stimulus measures if the economy
improves. A cut in the Fed's USD 85 billion monthly bond purchases could
hurt gold, which has benefitted from its role as a hedge against
Thianpiriya said Bernanke was unlikely to deviate from what he has said
before, as it was still too early to determine the timing of the
tapering down of the bond purchases.
Most economists expect the Fed to scale back the size of its bond
purchases by year end, and several expect reduced buying as early as
September, a Reuters poll showed.
Gold prices were supported by some buying in China, the No. 2 bullion
consumer in the world after India. Shanghai gold futures were up 0.4
percent on Monday.
However, demand in Asia has cooled from peak levels seen after the
mid-April sell-off in gold. Bullion is down 17 percent for the year
after 12 years of annual gains.
Indian purchases of gold have fallen since an import duty hike earlier
this month. The government is trying to narrow its current account
deficit by reducing gold imports.
ANZ's Thianpiriya said volumes to India have fallen significantly in the
last two weeks, while those to China were little changed.
Hedge funds and money managers slashed their bullish bets in gold and
silver futures and options in the week to June 11, a report by the
Commodity Futures Trading Commission showed on Friday.
Gold output in Australia, the No. 2 producer behind China, fell 5
percent in the first quarter on weather-related disruption to 63.5
tonnes, according to the latest Gold Quarterly Review by Surbiton
- posted 6 years ago