Gold price rises ahead of FOMC meeting, trading may get choppy

The gold price moved a little higher during Wednesday December 14 trading ahead of the conclusion of the USA FOMC meeting later today.

A first increase in US interest rates since December 2015 is widely expected. But any surprises or hints of more increases than anticipated could result in increased volatility, Credit Suisse said in a note.

Market participants will also be interested in the Fed’s economic projections and particularly how longer-term interest-rate expectations have changed since its September meeting, following November’s presidential election result.

The spot gold price was recently indicated at $1,162/1,162.40 per oz, up $3.90 on the previous day’s close. An interest rate rise is priced in, market participants said.

“Many are expecting a re-run of last year – a lurch lower after an FOMC cut but then a rebound in the weeks following,” MKS Capital said.

“If for any reason however the Fed stays their hand and leaves rates on hold, it would be a given there would be a sharp rally for gold with an immediate test of $1,200 likely,” it added.

In currencies the dollar index was last down 0.03% at 101.03/101.03.

In data today, Chinese M2 money supply was as expected at 11.4%, while new loans at 795 billion yuan exceeded the forecast 750 billion yuan.

Later today, the EU will release industrial production data. The USA has core retail sales, the PPI, the core PPI, retail sales industrial production and business inventories of note. 

The spot silver price was indicated at $17.015/17.075 per oz, up $0.16. Spot platinum at $933/943 per oz was up $9 and palladium climbed $1 to $728/733 per oz. 

(Editing by Mark Shaw)

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