Metals: Gold Prices Inch Lower Ahead of Fed Meeting
September 19 2017 - 3:28PM
Dow Jones News
By Amrith Ramkumar
Gold prices swung between small gains and losses Tuesday, with
many investors awaiting the next Federal Reserve policy statement
for clues about future interest-rate increases.
Gold for December delivery closed down less than 0.1% at
$1,310.60 a troy ounce on the Comex division of the New York
Mercantile Exchange. Prices have fallen in six of the last seven
sessions after hitting their highest level in more than a year
earlier this month, weighed down by easing tensions between the
U.S. and North Korea and a stronger dollar.
Many investors and analysts are waiting to see how the Fed
discusses inflation and the prospects for future rate rises at its
two-day meeting starting Tuesday. The U.S. central bank's policy
statement and Chairwoman Janet Yellen's press conference are
scheduled for Wednesday afternoon.
Division among Fed officials about when to raise interest rates
amid weaker-than-expected inflation has boosted gold prices in
recent weeks because the precious metal struggles to compete with
yield-bearing assets like Treasurys when borrowing costs rise.
However, the latest core inflation reading last week was the
strongest in months, which could push the Fed to raise interest
rates for a third time in 2017, investors and analysts have
said.
Although that decision is widely expected to come in December,
the Fed's discussion this week about economic data and how quickly
it wants to start shrinking its balance sheet could sway gold
prices.
"If the language does provide further illumination to the Fed's
intentions in December, I definitely think that will move gold
prices," said Rory Johnston, a commodity economist at Scotiabank.
Mr. Johnston said he expects the Fed to raise rates in December,
which along with a stronger dollar, could push gold back down
toward $1,250 a pound.
Investors were also keeping an eye on the United Nations General
Assembly meeting Tuesday to see how world leaders discuss recent
geopolitical turbulence. Many investors favor haven assets like
gold amid political uncertainty.
Gold prices were little changed after President Donald Trump
threatened to annihilate North Korea if the country fails to
abandon its pursuit of nuclear weapons. Investors and analysts have
said that it would likely take a more provocative action not yet
seen to inject fear back into the markets and support gold
prices.
"The market has become somewhat insensitive and immune to all
the heightened rhetoric," said Jason Mayer, senior portfolio
manager at Sprott Asset Management.
A weaker dollar was supporting prices slightly Tuesday by making
gold, a dollar-denominated metal, cheaper for foreign buyers. The
WSJ Dollar Index, which tracks the U.S. currency against 16 others,
was recently down 0.2%. The dollar bouncing higher off multiyear
lows hit earlier this month has hurt gold prices in the past
week.
Among base metals, copper for December delivery closed little
changed, up less than 0.1% at $2.9695 a pound. The industrial metal
has fallen more than 5% from nearly three-year highs hit earlier
this month after weak import and industrial production data out of
China, which is responsible for nearly half the world's copper
consumption. Many investors and analysts are waiting to see how a
key Communist party leadership transition plays out next month.
(END) Dow Jones Newswires
September 19, 2017 15:13 ET (19:13 GMT)
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