BULLION LATEST 20/09: Gold edges higher; caution sets in ahead of FOMC statement

The spot gold price edged higher during Asian morning trading on Wednesday September 20, with investors remaining cautious ahead of the conclusion of the US Federal Open Market’s (FOMC) two-day September meeting later today.

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The spot gold price was quoted at $1,312.40-1,312.80 per oz as of 04:08 GMT, up $1.95 from the previous session’s close. Trade has ranged from $1,309.73-1,313.05 so far today.

  • Investors have taken a wait-and-see approach ahead of the release of the FOMC’s statement on Wednesday, which could give insight into the central bank’s plans for further US interest rate rises.
  • While interest rates are widely expected to be left unchanged at today’s meeting, there is a 56.4% probability that the policy board will raise rates to between 1.25% and 1.5% in December, according to CME Group's FedWatch tool, which tracks the odds of interest rates in future months.
  • The Fed is also expected to announce its balance sheet reduction plans later today.
  • “Gold prices treaded water early in the trading session as investors await the outcome of the FOMC meeting,” ANZ Research noted.
  • However, a pick-up in the war of words between the USA and North Korea has given a slight boost to gold prices.
  • “Safe-haven buying emerged … as geopolitical risks rose. [US] president Trump gave a combative speech to the UN, threatening to totally destroy North Korea if forced to defend itself. And while he suggested diplomatic efforts should continue, he poured scorn on past efforts to halt Iran’s nuclear development," the bank added.

Silver, PGMs
  • In the other precious metals, the spot silver price edged $0.027 higher to $17.290-17.335 per oz.
  • Platinum increased $5 to $953.0-958.0 per oz, and palladium went up $5 to $914.0-919.0 per oz.
  • On the Shanghai Futures Exchange, gold for December delivery was recently at 280.10 yuan ($42.53) per gram, while the December silver was at 3,923 yuan per kg.

Currency moves and data releases
  • The dollar index was recently down 0.14% at 91.70.
  • In other commodities, the Brent crude oil spot price was up 0.47% to $55.40 per barrel, and the Texas light sweet crude oil spot price rose 0.76% to $50.28.
  • In equities, the Shanghai Composite was down 0.14% to 3,352.04.
  • In data on Tuesday, the EU’s July current account balance showed a slightly higher surplus of €25.1 billion ($29.9 billion). In the USA, building permits in August came in at 1.3 million. Housing starts over the same period were in-line with expectations at 1.18 million.
  • Today, UK monthly retail sales are due along with a host of US data including existing home sales, crude oil inventories as well as the conclusion FOMC’s September meeting with its economic projections, statement, rate decision and press conference.

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