Gold consolidates, markets await Fed decision

Gold futures traded sideways again on Wednesday morning in the US, with investors turning cautious before the Federal Reserve starts its two-day September meeting.

Gold for December settlement on the Comex division of the New York Mercantile Exchange was last up $1.80 or 0.1 percent at $1,325.50 per ounce. Trade has been in a narrow range between $1,316.60 and $1,327.50 so far.

Over the past two weeks before a media blackout, Federal Open Market Committee (FOMC) members have given mixed messages on growth, the global economy and the removal of accommodative policy.

While the central bank’s policy board sees signs of improved wage growth and a robust labour market, inflation remains below the Fed’s two-percent target.

With the presidential election approaching, the committee has only three remaining dates to lift interest rates – chair Janet Yellen has expressed a desire to increase rates at least once in 2016.

Still, market participants are doubtful – the odds of a September rate increase stand at just 15 percent while December is at 56.5 percent, according to the CME Group FedWatch tool.

“The precious metals look set to continue to consolidate while awaiting further information,” Andy Farida, an analyst at FastMarkets, said. “We expect volatility to return as the September FOMC meeting nears but strong directional moves may well have to wait until after the meeting.”

The FOMC’s statement will be released on Wednesday afternoon next week.

Holdings in the exchange-traded funds (ETFs) tracked by FastMarkets fell nearly three tonnes overnight – another indication that investors are proceeding with caution before the Fed meeting commences.

In data, Chinese M2 money supply for August at 11.4 percent beat the expected 10.5 percent while new loans at 949 billion yuan were significantly better than the forecast of 725 billion yuan.

Later in the US, import prices and crude oil inventories are slated for release.

Turning to European markets, Germany’s DAX gained 0.4 percent while France’s CAC-40 slipped 0.1 percent. The dollar was virtually unchanged at 1.1224 against the euro.

As for other precious metals, Comex silver for December settlement gained 10 cents or 0.5 percent to $19.075 per ounce. Trade has ranged from $18.845 to $19.175.

Platinum for October delivery edged up 90 cents or 0.1 percent to $1,036.90 per ounce while palladium at $656.65 was up just 55 cents.

(Editing by Mark Shaw)

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