Gold is stuck in ‘no man’s land’ before Fed chief gives outlook

Fed Chairman Jerome Powell – Image courtesy of Wikimedia Commons

(Bloomberg) — Gold is stuck in no man’s land as the market counts down to the Federal Reserve’s policy outlook.

Prices continue to tread water, hugging close to the $1,200-an-ounce level that’s been the norm since late August. Investors are awaiting another rate increase from the U.S. central bank on Wednesday and signals about the outlook, including an assessment of risks from the trade war.

Gold has been becalmed in recent weeks as investors grew accustomed both to the well-flagged likelihood of further rate rises from the Fed, as well as the bruising trade conflict between Washington and Beijing, which has fanned demand for the dollar. While the metal has lost ground this year as exchange-traded holdings fell, the pace of losses has leveled off.

Bullion for immediate delivery was down 0.2 percent at $1,198.84 an ounce in London and has traded in a range of about $30 over the past month. Prices have fallen 8 percent this year as the Fed hiked rates twice.

“Since even the most astute G-10 traders are struggling for dollar direction, gold remains mired in no man’s land, smack dab in the middle of the well-worn $1,190-$1,210 range,” Stephen Innes, Singapore-based head of Asia Pacific trading with Oanda Corp., said in note. “The focus will fall on the Fed’s forward guidance and Fed Chair Jay Powell’s press conference.”

After Wednesday’s decision — at which investors largely expect another quarter-point rise in borrowing rates — Chairman Jerome Powell will hold a media conference on the outlook. His remarks offer an opportunity to assess the state of the world’s largest economy as well as the trade-war risks.

“It is thought certain that the Fed will raise its key rate by an additional 25 basis points,” Commerzbank AG analysts including Daniel Briesemann, said in daily note. “This should not spark any further reaction from the gold price. What will be more important is the outlook given by Fed Chair Powell at the subsequent press conference.”

Other precious metals:

Silver was little changed at $14.457 an ounce. Palladium added 0.2 percent to $1,064.44 an ounce. Prices are near the highest since January, when the metal reached a record high. Platinum rose 0.4 percent to $826.50 an ounce.

(By Ranjeetha Pakiam and Rupert Rowling)

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