Gold supported ahead of key central bank meetings

The spot gold price inched higher during Asian trading hours on Tuesday ahead of the US Federal Open Market Committee (FOMC) and Bank of Japan (BoJ) meetings this week.

Spot gold was last at $1,316.00-1,316.30 per ounce, up $3.05 from Monday’s close. Trading ranged at $1,313.28-1,316.60 so far.

The US Federal Open Market Committee will meet later on Tuesday and concldue its monetary policy meeting on Wednesday.

While majority of market participants still do not see a Fed rate hike happening in September, the probability assigned by the Fed funds market for a rate hike this year has increased.

On Monday, around 15 percent see a rate hike happening in September, up from 12 percent last Friday, while 60.1 percent now sees this taking place in December, up from 55 percent last Friday, according to the CME Group Fedwatch tool.

In Japan, the BoJ is expected to announce on Wednesday another round of stimulus into a weak economy. The Japanese central banks introduced negative interest rates earlier this year but that has failed to ignite inflation or reverse nearly three decades of little to no growth.

“Prices may well get more nervous ahead of Wednesday’s decisions from the Bank of Japan and the FOMC on rates and monetary policy,” William Adams, head of research at FastMarkets, said.

“We feel prices will have to push up into new high ground to avoid further stale long liquidation and possibly short-selling. Our big-picture outlook remains bullish but more profit-taking could easily be triggered if the price action disappoints, as it may be starting to do.”

On Monday, US NAHB housing market index in September came in at 65, above the forecast of 60.

Key US data due later today includes building permits and housing starts.

In currencies, the US dollar index rose 0.05 percent to 95.88 so far on Tuesday.

In other commodities, the Brent crude oil spot price fell 0.22 percent to $45.80 per barrel, and the Texas light sweet crude oil decreased 0.43 percent to $43.60 recently on Tuesday.

In equities, the Shanghai Composite eased 0.24 percent to 3,018.68 so far in the day.

In other precious metals, silver was last at $19.23/19.25, up $0.095. Platinum rose $7 to $1,023/1,029, and palladium gained $7 to $682/690 recently on Tuesday.

On the Shanghai Futures Exchange, gold for December delivery was last unchanged at 284.85 yuan per gram, and the December silver was flat at 4,298 yuan per kilogram.

(Additional reporting by Dalton Barker)

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