Gold eases but holds above six-week low
SINGAPORE — Gold edged lower after equities gave up early gains on Tuesday, although demand from jewellers helped prices rebound from their lowest in more than a month as investors waited on the results of a US Federal Reserve meeting.
Even though the Fed is likely to hold off from new moves at its two-day gathering after taking significant action last month, its policy statement on Wednesday will be closely scrutinised.
Gold eased $5.40 to $1,722.89 an ounce by 6.05am GMT after falling to a six-week low around $1,713 on Monday — a level which ignited demand from jewellers and speculators in Asia.
"We are not expecting much, unless there are surprises from the Fed. So I believe gold will still be trading within this band. A lot of investors are also eyeing the outcome of the presidential election in the US," said Brian Lan, MD of GoldSilver Central in Singapore.
"On the local market front, there’s still very positive demand from clients. We see more clients coming to purchase gold, especially whenever there’s a price dip."
US gold for December was at $1,723.90 an ounce, down $2.40.
The US central bank’s policy-setting Federal Open Market Committee (FOMC) starts its meeting on Tuesday and is scheduled to release a statement on its policy deliberations at about 6.15pm GMT on Wednesday.
"Markets could also be positioning ahead of the FOMC meeting as the Fed has previously talked up its capacity to support the US economy, but we are not expecting any signs of fresh stimulus," ANZ said in a report.
In other markets, Asian shares were lacklustre with the corporate reporting season getting under way in the region, as investors stayed cautious after global shares faltered overnight on weak earning reports and outlook.
The euro held steady against the dollar as expectations that Spain would apply for a bail-out helped support the euro in recent weeks, but uncertainty over the timing of such a move has limited its gains.
The physical gold market was subdued after seeing strong demand from top consumer India following a drop in prices on Monday. Premiums were steady in Singapore at 80c.
"Perhaps India will buy again if prices don’t move extensively higher. There’s one thing to note though — Indonesia and Thai currencies are strong, so gold has become less appealing as an investment," said a dealer in Singapore.
In India, demand jumped overnight after a rebound in the rupee cut prices by 1% during the country’s festival season, which will peak next month with Diwali.