Gold was flat this morning moving between small losses and gains, as trading was very quiet, almost a hush as we ease toward the Federal Reserve meeting beginning tomorrow. Every trader, regardless of small retail traders, institutional traders, Hedge Fund and Pension Fund managers are at the edge of their seats waiting for the end of this movie, which is expected to be a cliff hanger. No one knows exactly what to expect. Gold is trading at 1234.90 up a few points while silver eased to 19.565 down by 40 points after disappointing Chinese manufacturing data hit the wires. Copper remains high above the 3.30 level but in the red by 4 points as the data from China is countermanded by the drop in the US dollar ahead of the FOMC gathering. It looked like traders were taking last minute positions, pushing the dollar back down after it climbed on Friday after strong economic data. Traders remain unsure as what to expect. The week of positive economic data would indicate that the Fed would begin to taper. Mr. Bernanke’s handover to Janet Yellen next month would offset this as he might want to leave this decision to Ms. Yellen. Fed speakers before the blackout all indicated that some sort of tapering might occur at this meeting. GDP soared this prior month to 3.6% while unemployment declined to 7.0% from 7.3% which really pushed the Fed’s into a corner. Inflation remains tame and PPI was a bit disappointing. Retail sales soared above expectations last week. Lastly, the compromise in Washington took care of the budget and the debt ceiling through 2014. What can traders expect on Thursday, no one really knows. Do you care to guess?
As we get closer to year end, traders are trying to book profits and were moving to higher risk assets pushing the stock markets to record level but as the FOMC grows closer they have moved to safety. Gold for 2013 is headed to end the year on a negative note. Blame it on the unending worries with regard to the QE taper that affected sentiments towards precious metals in the international markets or call it the effect of strict restrictions on gold supply in the Indian markets that impacted demand in the world’s top consuming country; overall, gold and silver got pushed into the territory of bears that refused to send the metals back to the bulls, at least in 2013. This year’s annual decline in gold prices will be the first in more than a decade.
Price trend for 2014 will be unfolded with clarity only after the Federal Reserve provides direction and indication towards the pullback in stimulus spending in its meeting scheduled for the 18th Dec’13. World markets are seeing a sense of caution as we approach the Federal Open Market Committee event.
Base metals and industrial metals ended last week on a positive note on the back of declining inventories and demand from China, but this morning’s disappointing HSBC PMI data will weigh on the metals group today, but should be balanced by the falling greenback. As mentioned above silver and copper have declined this morning along with platinum which gave up $2.00 to trade at 1360.40 while there was a surprising rise in palladium adding 30 points to 717.20 but staying mostly flat following the tone set by gold.