Gold Futures Trade Near Steady Ahead of FOMC Announcement

Gold futures traded near steady Wednesday as a little-changed dollar and anticipation of the Federal Open Market Committee (FOMC) meeting later in the day dominated the market. The FOMC is widely expected to announce a second Treasurys purchasing program aimed at expanding the money supply and stimulating growth. Some investors worried that the so-called quantitative easing will do more to increase inflation and depreciate the dollar, and purchased gold to hedge against these risks.

Key Takeaways:

Gold prices have rallied to a record settlement of $1,377.60 per troy ounce on October 14, anticipating the FOMC's quantitative easing program.
The most actively traded contract, for December delivery, was recently up 0.02%, or 60 cents, at $1,357.50 per troy ounce on the Comex division of the New York Mercantile Exchange.
Frank Lesh, broker and futures analyst at FuturePath Trading, stated that while the market expects a $500 billion stimulus program, "there's still room for surprise," which could impact the market.
Many gold-market participants have already positioned themselves ahead of the FOMC announcement, with few new participants entering the fray in recent days.
Investor interest has slowed in light of the market focus centering on the FOMC meeting, according to Suki Cooper, precious metals analyst at Barclays Capital.

Statistics:

Gold futures traded near steady, with the December contract up 0.02% or $0.60 per troy ounce.
The dollar-denominated precious metal saw little direction from the dollar, which was near flat against the euro.
The euro was recently at 1.4024, down 0.09 cents from 1.4033 earlier.
Investor interest has slowed, with both short-term tactical traders and longer-term investors using exchange-traded funds (ETFs) paring positions ahead of the FOMC announcement.

Sources:

Dow Jones Commodities News via Comtex, November 3, 2010.
Tatyana Shumsky, Dow Jones Newswires; 212-416-3095; tatyana.shumsky@dowjones.com.