Gold fluctuated on Wednesday and traded mostly lower ahead of the release of FOMCs July meeting minutes, which analysts speculate might indicate deceleration of Feds monetary easing program could start in September. Silver, platinum and palladium also declined.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at $1 362.80 per troy ounce at 8:03 GMT, down 0.71% on the day. Prices held in range between days high of $1 373.90, near Mondays two-month high, and low of $1 361.30 per ounce respectively. The precious metal rose 0.09% on Tuesday but extended its weekly decline to 0.9% following Wednesdays losses.
Gold has declined 18% this year amid speculations the Federal Reserve may begin winding down its monetary easing program after capping a 12-year bull run in 2012. An exit from Quantitative Easing would deliver a heavy blow to dollar-priced raw materials as it will strengthen the dollar, thus making commodities more expensive for foreign currency holders and limiting their appeal as an alternative investment. At the same time, gold is mainly used as a hedge against inflation, which tends to arise as central banks ease money supply, therefore stimulus tapering would cripple demand for the precious metal.
Assets in the SPDR Gold Trust, the biggest bullion-backed ETP rose to 914.12 metric tons yesterday after rising on a weekly basis for the first time since December last week.
Wang Xiaoli, chief investment strategist at CITICS Futures Co., said for Bloomberg: “Gold has benefited from the recent weakness in the dollar and investors are looking ahead to the Fed minutes before making their next move. The SPDR appears to be stabilizing and demand is strong in China whenever prices pull back.”
According to World Gold Council data, global bar and coin sales rose by 78% to 507.6 tons in the second quarter compared to a year earlier as demand in India and China, the world’s top two consumers, more than doubled. Jewelry demand increased by 47% to 575.5 tons. Data from the Shanghai Gold Exchange showed volumes of gold of 99.99% purity climbed to 10.926 tons yesterday, the highest since August 2.
Apart from Wednesday’s Fed minutes, market players will also be looking ahead at the upcoming U.S. data to gauge the strength of the U.S. economy. On Wednesday, Julys Existing Home Sales are expected to have risen to 5.13 million, up from June’s 5.08 million. On Thursday, last week’s Initial Jobless Claims likely rose by 10 000 to 330 000, while the Markit Flash U.S. Manufacturing PMI for August is projected to have advanced to 54.0 from July’s 53.7. On Friday, July’s New Home Sales are expected to have declined to 0.490 million houses sold, down from 0.497 million in the preceding month.
Elsewhere on the precious metals market, silver, platinum and palladium tracked golds downward movement. Silver for September delivery traded at $22.785 per ounce at 8:00 GMT, down 1.24% on the day. Prices held in range between days high and low of $23.145 and $22.767 per ounce respectively. Meanwhile, platinum October futures fell by 0.78% to $1 513.65 per ounce. Futures varied between $1 524.75 and $1 512.80 per ounce. Palladium for September delivery stood at $743.90 an ounce, down 0.77% on the day. Futures shifted between days high and low of $750.30 and $743.10 per troy ounce respectively.
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