Gold price edges up, market cautious ahead of central bank meetings

Gold edged higher on Tuesday morning in London but investors are proceeding cautiously ahead of the US Federal Open Market Committee (FOMC) and Bank of Japan (BoJ) meetings this week.

– The spot gold price was last at $1,316.50/1,316.90 per ounce, up $3.60 on Monday’s close. Trade has ranged from $1,313.28 to $1,317.95 so far.

– The US Federal Open Market Committee will meet later on Tuesday and conclude its monetary policy meeting on Wednesday. While most market participants – only around 15 percent, according to the CME Group Fedwatch tool, compared with 12 percent last Friday – still do not anticipate the Fed raising rates  in September, 60.1 percent now see a move in December.

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

– “There are downside risks for gold at this point, particularly as prices have become acutely sensitive to data releases and Fedspeak,” UBS noted. “The disappointment with the BOJ under-delivering relative to market expectations in recent months poses a risk for gold to the extent that this impacts monetary policy expectations elsewhere.”

In the other precious metals, silver was little changed at $19.195/19.245 per ounce while platinum at $1,026/1,032 was up $10 and palladium at $684/693 was $9.50 higher.

(Editing by Mark Shaw)

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