PRECIOUS METALS: Spot Gold Edges Higher Ahead Of Fed Meeting
August 09 2010 - 7:00AM
Dow Jones News
Spot gold is slightly higher Monday in a quiet start to the
week, as market participants await the Federal Reserve meeting
Tuesday.
The euro's strength against the dollar is supporting gold, and
analysts said they expected the Fed's comments this week will
further weaken the dollar and indirectly boost gold.
At 1013 GMT, spot gold was trading at $1,206.22 a troy ounce, up
0.1% on the day. The EUR/USD was at $1.3273, down a tad from
$1.3279 at the close on Friday.
Gold traded above $1,200/oz Friday for the first time in four
weeks, and on Monday was managing to stay above that key
psychological level. However, the metal ran into resistance at the
50-day moving average of $1,210.92/oz, said Credit Suisse analyst
Tom Kendall in London. "We're in a little pause ahead of (the
meeting)."
The Federal Open Market Committee will announce its interest
rate decision Tuesday. The Fed may lower its growth outlook on the
U.S. economy and possibly discuss measures to stimulate growth,
analysts said.
"Any additional quantitative easing is likely to be interpreted
as bearish for the dollar," said Kendall, adding this would be
bullish for gold.
UBS analyst Edel Tully said investor demand for gold will
increase the longer the metal stays above $1,200/oz, even though
physical demand will ease and scrap sales may pick up. In a report
Monday, Tully reiterated the bank's one-month forecast of
$1,230/oz.
In other precious metals, spot silver was 0.14% higher at
$18,483/oz, spot platinum was 0.7% lower at $1,552.75/oz, and spot
palladium was 0.6% lower at $485.03/oz.
-By Matthew Walls, Dow Jones Newswires; +44 (0)20 7842 9412;
matthew.walls@dowjones.com