Bullion’s lost 10 percent over the past year amid prospects for higher USA rates, which curb the appeal of gold as the metal doesn’t pay interest like assets such as bonds.
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Many expect traders to remain on the sidelines until the Fed statement on Thursday, though prices could drop because of persistent uncertainty.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, moved up to 678.18 tons from its previous close of 672.18 tons.
The Fed meets on Wednesday and Thursday to discuss the timing of the first USA rate increase in almost a decade, which could hurt gold prices.
LONDON – Gold edged down on Monday to just above a one-month low, as the dollar recovered and global stocks rose ahead of a Federal Reserve policy meeting that will be scrutinized for clarity on when the USA central bank will raise interest rates.
“The strength Gold depend on the response of equity and currency markets to the Fed’s decision”. While other data showed continued weakness in manufacturing, economists said that was unlikely to have much impact on the U.S. central bank’s decision.
“Speculative financial investors are doubtless also responsible for the recent fall in the gold price, as they reduced their net long positions by a third to 26,800 contracts in the week to 8 September, exclusively as the result of an increase in short positions”.
That held gold priced in Sterling around £715 per ounce, the multi-year low hit both by the crash of 2013 and again on gold’s volatile spike downwards last November.
Expectations that the Fed will hike rates this week have eased recently, due to concerns over slowing economic growth in China and volatility in financial markets. It is important to point towards the fact that gold now trades below all important daily moving averages which is considered to be a bearish signal.
Although analysts are a bit more Bullish heading into next week, their enthusiasm is tempered.
“It’s drifting on lack of real interest ahead of the Fed”, said James Steel, chief metals analyst for HSBC Securities in New York, adding that the strong dollar also pressured prices.
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However gains could be limited as expectations will only be pushed back until December.
