Gold, Silver and Copper Trading Up Ahead of FOMC

Gold, Silver and Copper Trading Up Ahead of FOMC
Gold, Silver and Copper Trading Up Ahead of FOMC

Gold continued to gain in Asian trading on Tuesday morning adding over $5.00 (1660.65) ahead of the FOMC meeting beginning today. Bullion edged up on Monday but struggled to break away from a two-week low hit in the previous session, with a brighter global economic outlook dampening the metal’s appeal as a safe haven. EU leaders have spent the last week talking up the euro saying that the euro zone crisis is stabilizing while the U.S. recovery is gaining traction helped drive investors to the higher-yielding equity market. Investors will closely watch the Federal Reserve’s policy meeting which starts today as well as a string of data on employment, economic growth and consumption, to gauge the pace of recovery in the world’s largest economy. The US dollar traded flat yesterday having little effect on the value of the commodity.

Yesterday was a light day for eco data, until the US opened. US durable goods reported well above forecast, while pending home sales plummeted. On the economic data front, the US consumer confidence and CaseShiller home prices are likely to maintain at same levels as procession of new homes reports have resulted in increased rentals which may limit the prices of US homes from continuous growth.  Traders can expect the US releases to remain in line with expectations and may fail to support gains in base metals.

Markets would also eye the FOMC, non-farm and US GDP later during the week and above these high voltage events we expect base metals to remain in the green zone until the afternoon. Thereafter concerns of slower US GDP and weak addition of manufacturing jobs may continue to support base metals for the rest of the week. The main focus will be the FOMC meeting.  The outlook for the monetary policy should be the key for gold. No policy change is expected and the Fed is likely to continue with $85billion asset purchase per month. With higher returns from the other asset classes, gold should take a dip once again. Spectators can expect a bounce up to $1670-75 can be seen after which it should fall. The nonfarm payroll report is expected to have little market effect coming so closely on the heels of the FOMC meeting.

In the latest gold holdings data from the International Monetary Fund, Iraq cut its gold holdings by a 25% to 29.9 tons in November, reversing some of the country’s recent efforts to bolster its reserves.

Silver regained 21 cents to trade at 30.990 this morning bounding along with gold and on a bit stronger metals family ahead of the FOMC meeting. Industrial metals have been trading on a positive note following global market sentiment as recovery in the US and China and a healing in the eurozone buoys traders sentiment. Copper edged higher on Monday after better-than-expected U.S. durable goods data lifted confidence about growth and demand in the world’s largest economy, but uneasiness about the growth of supply kept prices in check. Copper prices hit intraday highs after data showed that U.S durable goods orders rose 4.6% in December, surpassing expectations for a 1.8 percent gain. Hedge funds and money managers increased the size of their net longs in futures and options of gold, silver and copper last week on signs of continued improvement in the U.S. economy.

Leave a Reply

Your email address will not be published. Required fields are marked *