Gold trades above two-week low on fed outlook to physical buying
By Bloomberg
Gold was little changed above the lowest in almost two weeks in London as investors weighed whether the Federal Reserve will keep borrowing costs low and on signs physical buying is picking up.
The Fed starts a two-day meeting today, when policy makers are expected to say they'll keep interest rates at a record low for an extended period even as they end bond buying as the economy improves. Traders have cut the probability the central bank will raise borrowing costs by October 2015 to a 49 percent chance from 79 percent odds on Sept. 30.
The Bloomberg Dollar Spot Index was little changed after reaching the lowest in almost a week. Data showed yesterday an index of pending U.S. home sales rose less than forecast in September. More physical demand, particularly from Asia, has given "underlying support" to gold, James Steel, an analyst at HSBC Securities (USA) Inc., said in a note.
Gold rebounded from this year's low set Oct. 6 "in part due to waning expectations that the Federal Reserve could hike interest rates earlier," Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a report today. "While an end to QE is widely expected, what would determine gold's future trajectory is the kind of forward guidance the Fed provides concerning interest rates."
Gold for immediate delivery rose 0.2 percent to $1,228.98 an ounce by 8:58 a.m. in London, according to Bloomberg generic pricing. It reached $1,222.62 earlier today, the lowest since Oct. 15. Gold for December delivery was little changed at $1,228.50 on the Comex in New York.
Declining Streak
Futures trading volume was 29 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg show. Gold retreated 1.8 percent in the previous four days in London, the longest run of losses since August.
In China and India, the largest buyers, demand typically picks up in the fourth quarter during festive periods and the wedding season. Volumes for the benchmark spot contract on the Shanghai Gold Exchange were little changed from yesterday, and near a two-week high set Oct. 23, the latest data showed.
Silver for immediate delivery rose 0.7 percent to $17.2517 an ounce in London. Palladium added 0.3 percent to $787.25 an ounce. Platinum was little changed at $1,258.10 an ounce.