BULLION LATEST 12/12: Gold edges higher ahead of FOMC meeting

The spot gold price recovered slightly from the multi-month lows reached in the overnight session during Asian morning trading on Tuesday December 12, but investors are likely to remain cautious ahead of the US Federal Open Market Committee’s (FOMC) two-day meeting which starts later today.

The spot gold price was recently quoted at $1244.05-1244.45 per oz, up by $1.60 as of 11:59am Shanghai time. Trade has ranged from $1242.55-1244.80 so far today.

  • The dollar has weakened slightly this morning but remains in high ground.
  • The dollar index was down by 0.03% at 93.94 as of 12.16am Shanghai time - the index had reached a high of 94.09 on December 8, its highest since November 23.
  • The slight weakness in the dollar has allowed the yellow metal to stage a minor recovery after falling to its lowest since July 21 at $1,240.85 per oz on Monday, with some profit-taking also likely to be providing support.
  • “I suspect it is no coincidence that the day that Bitcoin futures officially started trading, gold prices dropped in an otherwise sideways overnight session in most markets. The Commitment of Traders Report showed a substantial drop in speculative long positioning which should be no surprise once $1,260 per oz broke,” Jeffrey Halley, senior market analyst at Oanda said.
  • “This morning [gold] has eked out a small rally to 1244.50 on physical buying and profit-taking, but the price action remains unconvincing,” Halley added.
  • Investors will likely remain cautious ahead of the FOMC’s December meeting which concludes on Wednesday.
  • With an interest rate increase widely expected at this week’s meeting, participants will be focused on the comments from the US central bank about the pace of further increases next year - which depending on hawkish the language is, could push gold prices lower.

Silver, PGMs

  • In the other precious metals, the spot silver price was up by $0.040 to $15.720-15.780 per oz.
  • Platinum was up by $3 at $887-892 per oz, and palladium increased by $5 to $1,012-$1,017 per oz.
  • On the Shanghai Futures Exchange, gold for June delivery was down by 0.29% to 271.75 yuan ($41.06) per gram, and the June silver was quoted at 3,732 yuan per kg, down by 0.32% from the previous session’s close.

Currency moves and data releases

  • The dollar index was down by 0.03% at 93.94 as of 12.16am Shanghai time.
  • In other commodities, the Brent crude oil spot price was up by 0.87% to $65.28 per barrel, and the Texas light sweet crude oil spot price increased by 0.62% to $58.26.
  • In equities, the Shanghai Composite was down by 0.57% to 3,303.13.
  • In data on Monday, the US October Jolts job openings report eased slightly to 6 million compared with an upwardly revised 6.18 million print in September, which was a record high.
  • “Hiring was up 3.8% over the month (from 3.6%) with the quits rate steady at 2.2%. The data suggests the US labor continues to tighten,” ANZ Research noted.
  • Meanwhile, bank lending in China hit a fresh record after a much stronger-than-expected surge in credit in November. Chinese banks extended 1.12 trillion yuan in net new yuan loans in November, data from the People’s Bank of China showed on Monday, well above analysts’ expectations who had forecast new yuan loans would rise to 800 billion yuan.
  • The economic agenda is busy today with data on the United Kingdom’s consumer prices, producer price input and output, retail prices and house prices. US data out later includes the NFIB small business index, producer prices, core producer prices and the federal budget balance.
  • In addition, European Central Bank president Mario Draghi is speaking in Frankfurt, Germany.
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