Gold was little changed on Tuesday after two days of declines amid speculations that the Federal Reserve will not initiate an interest rate hike at its upcoming policy meeting, despite a stronger US economy.
Comex gold for delivery in February slid 0.04% to $1 278.9 per troy ounce by 08:18 GMT, shifting in a daily range of $1 283.9 – $1 272.0, its lowest since January 19. The precious metal lost 1.02% on Monday.
The Federal Open Market Committee kicks-off its two-day policy meeting later today, when official are to discuss whether to increase US interest rates amid improving economy. However, pressured by plunging oil prices, the countrys inflation is still below Feds desired level of 2%. Investors would watch closely for the outcome of the discussion as an eventual rate hike would hurt demand for the non-interest-bearing gold.
The US dollar index for settlement in March was down 0.07% at 95.050 at 08:18 GMT, holding in a daily range of 95.325-94.975. The US currency gauge climbed 0.07% on Monday to 95.115, but not before it touched 95.850, its highest in at least a decade. A stronger greenback makes dollar-denominated commodities more expensive for holders of foreign currencies and curbs their appeal as an alternative investment, and vice versa.
The “gold market’s focus may shift to the upcoming FOMC meeting,” James Steel, an analyst at HSBC Securities, wrote in a note, cited by Bloomberg. “The market’s focus has been more so on global monetary policy expectations and less so on Greek developments. In the near term, bullion may continue to consolidate from gains made earlier in the year.”
The precious metal is up around 9% so far this month, as global growth concern, spurred by the International Monetary Funds decision to cut its global growth projections, and the launch of a quantitative easing program from the European Central Bank have pushed gold traders to seek the safety of the metal.
Additionally, the yellow metal was boosted by instability in European markets, caused by worries that Greece may exit the 19-member zone.
After the elections on Sunday, which the anti-austerity party Syriza decisively won, finance ministers across Europe began to review options for breathing life into Greece’s struggling rescue program. However, European officials warned that they will not cope with party leader Alexis Tsipras demands to reduce Greeces debt.
Meanwhile, according to data released by the IMF, Russia increased its gold holdings for a ninth consecutive month, followed by Kazakhstan and the Netherlands, which raised its stockpiles of the yellow metal for the first time since 1998. Turkey and Mexico reduced their gold reserves.
Assets in the SPDR Gold Trust, the biggest bullion-backed ETF, climbed 1.79 tons on Monday to 743.44 tons. Changes in holdings typically move gold prices in the same direction.
Pivot Points
According to Binary Tribune’s daily analysis, February gold’s central pivot point on the Comex stands at $1 284.7. If the contract breaks its first resistance level at $1 293.9, next barrier will be at $1 308.3. In case the second key resistance is broken, the precious metal may attempt to advance to $1 317.5.
If the contract manages to breach the S1 level at $1 270.3, it will next see support at $1 261.1. With this second key support broken, movement to the downside may extend to $1 246.7.
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