Speculators have a busy few days with the FOMC meeting minutes due today along with the ADP payroll report ahead of Friday’s nonfarm payroll report. In the middle traders will see the Bank of England and the European Central Bank meetings on Thursday. Each of these critical events singularly or together have the ability to send precious metals and the greenback soaring or tumbling. Gold is trading this morning at 1226.90 giving up $2.70 following its tumble earlier this week. Gold touched $1250 and then made a U turn and continues to fall. Traders are expecting the FOMC minutes today to show that the members are supportive of additional tapering. US economic data remains positive and could push the Fed at its next meeting to increase its tapering and decrease its asset purchases to $50 billion. Prices were hurt by data showing the US trade deficit fell to a four-year low in November as exports hit a record high and weak oil prices held down the import bill. The numbers, the latest in a string of strengthening economic fundamentals, left economists anticipating a far stronger pace of growth for the fourth quarter than previously expected.
The dollar was mixed in Asia on Wednesday as investors await the release of minutes from the Federal Reserve’s most recent meeting to see if it plans to continue winding down its stimulus program. The Fed will later in the day release the minutes from its December meeting, when it said it would reduce its stimulus program by $10 billion a month to $75 billion from January. Analysts will be looking to see if there are any clues about its plans for the scheme this year following a string of upbeat data on the economy. Traders were buoyed by news Tuesday that the US trade deficit had shrunk in November as exports surged. On Friday the Labor Department will release closely watched nonfarm payrolls figures, which will provide fresh insight into the state of the economy. An upbeat jobs report will boost confidence in a further taper from the Fed when they meet on January 29.
Some also warn that as the Fed starts to trim its bond holdings, it could spook financial markets, threatening the economy’s recovery by causing stock prices to drop and interest rates to rise. Traders seem to be moving from gold to equities as the NASDAQ and the S&P reversed their down streak to gain steadily on Tuesday. Elsewhere in metals trading, platinum lost $3.50, or 0.3%, to $1,412 an ounce while palladium shed $3.45, or 0.5%, to $738.25 an ounce. High-grade copper meanwhile, tacked on a penny to $3.37 a pound. Copper gained 0.3 percent on Tuesday on the back of favorable economic data from the Eurozone. Also, a decline in LME copper inventories for the 44th consecutive session by 0.9 percent to 353,075 tonnes along with upbeat global market sentiments supported gains in the metal. However, strength in the DX capped sharp gains.