Gold continues to search for direction on Wednesday in the futures market. Investors could get some cues from the minutes of the October 29-30 US Federal Reserve meeting that will be released later this evening. Gold has been trading at a pretty tight range at the 1275.00 level. Lending support to gold is US Federal Reserve Chairman Ben S. Bernanke’s comments that a few months of economic data have not altered the Fed’s view that the American economy is gaining strength. Nor does it have an intention to start pruning its $85-billion-a-month stimulus program. Though the US labour market is showing signs of improvement, more proof is needed before the winding up the stimulus programme can be done. The comments have not really set the counter on fire as it is stuck near a week’s low. Last week Janet Yellen the soon to be Fed Director seemed to indicate that she would be looking at growth along with labor and inflation before taping the Fed’s easy money policies. Later today, gold traders will get a look at US inflation numbers with CPI due in the North American trading session. U.S. retail sales are due also and analysts aren’t looking for any change in October. Existing-home sales are slated for at 10 a.m. USA time and are projected to dip to an annual rate of 5.10 million last month from 5.29 million in September. Later in the day, the Federal Reserve is slated to release the minutes from its last meeting, possibly providing clues to the timing of its plan to slow monetary stimulus Money managers and hedge funds are still bearish about gold with one view that gold’s halt near $1,280 is temporary before it can head below $1,150. Holdings in SPDR Gold Trust, the world’s biggest exchange-traded fund, fell to 863.01 tonnes on Tuesday. It is a four-and-a-half-year low.
Industrial metals including silver and copper are continued their losing streak for the seventh straight session yesterday, tumbling to a three-month low on back of frantic speculative unwinding coupled with subdued demand from coin makers. This morning metals are trading on a positive note after comments from China’s central bank. Silver is trading at 20.432 up by 98 points and copper has added 16 pips to trade at 3.177. The People’s Bank of China said it would widen the daily range that China allows the renminbi (also called the yuan) to trade in and also would phase out investment caps for foreign and domestic investors. China also clearly wants the yuan to become a competitive medium of exchange with the US dollar and this announcement is just the latest in a series of policy moves to encourage this development in global capital markets. Copper on the LME gained for the first time in three days after Fed Chairman Ben S. Bernanke said the benchmark interest rate will remain low long after policy makers reduce bond purchases. Bernanke said a “preponderance of data” would be needed to start removing stimulus, after his nominated successor, newly appointed Fed Head Janet Yellen, signaled last week that the U.S. economy is not yet strong enough to warrant cuts to the record bond-buying program. The Federal Open Market Committee publishes minutes of its October meeting today.