BULLION LATEST 18/09: Gold succumbs to selling pressure; focus on Fed meeting

Gold edged lower during Asian morning trading on Monday September 18, coming under selling pressure due to an absence of geopolitical risk while prospects of monetary policy tightening in the USA also weighed on the yellow metal.

The spot gold price was quoted at $1,317.85-1,318.25 per oz as of 04:25 GMT, down $2.0. Trade has ranged from $1,315.50-1,319.70 so far today.

  • A firmer dollar and lack of geopolitical risk has seen investor appetite for the yellow metal decline, with prices succumbing to selling.
  • The dollar index was recently at 91.85, still off a multi-year low of 91.01 seen on September 8.
  • “Gold’s correction lower continues in Asia this morning following Friday’s $15 sell-off from $1,335 to $1,320. Gold fell to $1314.50 on the Comex open this morning before catching its breath and rising to its present level at $1,317 as a lack of weekend event risk saw hedges unwound,” Jeffrey Halley, senior market analyst at Oanda, said.
  • “Gold prices also came under some selling pressure, with investors dismissing geopolitical risks and instead focusing on the possibility of rate hikes from central banks,” ANZ Research noted.
  • Expectations of a rate increase by the US Federal Reserve in December have risen sharply in recent weeks, and now sit at around 46%, the bank added.
  • Investors will be focused on the upcoming two-day US Federal Open Market Committee meeting, which begins on Tuesday and concludes with a news conference from chair Janet Yellen, as the US central bank is expected to announce a balance sheet reduction to ‘normalise’ monetary policy.
  • The committee is unlikely to do anything with rates at this meeting but could drop some hints on its plans for future rate changes.

Silver, PGMs

  • In the other precious metals, the spot silver price was up $0.04 to $17.595-17.615 per oz.
  • Platinum increased $3.0 to $966.0-971.0 per oz, and palladium rose $6.0 to $927.0-932.0 per oz.
  • On the Shanghai Futures Exchange, gold for December delivery was recently at 280.15 yuan ($42.75) per gram, and the December silver was at 3,967 yuan per kg.

Currency moves and data releases

  • The dollar index was down 0.02% at 91.85.
  • In other commodities, the Brent crude oil spot price was up 0.13% to $55.69 per barrel, and the Texas light sweet crude oil spot price eased 0.04% to $50.42.
  • In equities, the Shanghai Composite was up 0.31% to 3,364.14.
  • In US data on Friday, core retail sales undershot with a 0.2% rise in August, compared with an expected and previous increase of 0.5% and 0.4%, respectively. Industrial production for August also disappointed with a decline of 0.9% – an increase of 0.1% had been expected.
  • In data today, the EU’s final CPI and the USA’s NAHB housing market index are of note.
  • In addition, Bank of England governor Mark Carney is speaking.