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Gold Futures End Nearly Unchanged as Traders Await Fed Decision

Strategic Insights

— 1 min read

Gold futures ended nearly unchanged Wednesday, as traders waited for the Federal Reserve's policy decision, which may have implications for short-term demand for gold as a refuge. The Federal Open Market Committee's two-day meeting concluded, with traders expecting some form of stimulative move to support the US economy. The announcement of a reshuffling of the central bank's portfolio, replacing short-term government debt with longer-term investments, is expected to have a short-term impact on the precious metals market. Investors are also keeping a close eye on moves in the US dollar, as a stronger dollar can make gold futures more expensive for buyers using other currencies.

Key Takeaways:

  • Comex December gold futures fell $1, or 0.1%, to settle at $1,808.10 a troy ounce.
  • The Federal Reserve's policy decision is expected to have a short-term impact on the precious metals market.
  • A reshuffling of the central bank's portfolio, replacing short-term government debt with longer-term investments, may prompt relief in riskier markets and potentially harm gold prices.
  • Some investors buy gold on the belief that it holds its value better than other assets during economic turmoil.
  • The US dollar and gold can move in tandem when fear drives global markets, but occasionally show an inverse relationship, making gold more expensive for buyers using other currencies.
  • The European debt crisis continues to hang over global markets, supporting the price of gold.

Statistics:

  • Comex December gold futures fell $1, or 0.1%, to settle at $1,808.10 a troy ounce.
  • The Federal Reserve's policy statement is expected to be announced at 2:15 p.m. EDT.
  • Gold prices rose to record highs above $1,900 an ounce earlier this month, driven by fears of a possible default-spurred credit crunch in the eurozone.

Sources:

  • Dow Jones Commodities News via Comtex
  • Comtex
  • Kitco Metals analyst Jon Nadler
  • Standard Bank analyst Marc Ground
  • Dow Jones Newswires article by Matt Day, dated September 21, 2011

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