Gold steady near $1,100, Fed decision eyed

By Risa Maeda

TOKYO (BestGrowthStock) – Gold held steady near $1,100 an ounce on Wednesday, supported by consistent retail demand from Asia and views that a U.S. rate decision could halt the dollar’s recent gains and add to the precious metal’s allure.

The market is carefully watching for any influence on the dollar that could affect gold from the Federal Reserve’s interest rate decision expected around 1915 GMT. President Barrack Obama’s State of the Union speech is also due on Wednesday.

China’s credit tightening steps and Obama’s plans to limit banks’ risk-taking have dampened confidence about an economic recovery in the past few weeks, helping investors shift back to the dollar from riskier assets, including commodities.

“The most critical thing for gold is how the dollar will react after the U.S. rate decision,” said Tatsufumi Okoshi, a senior economist at Nomura Securities Co.

“If a rally in the dollar halts versus the euro, that could lift gold to around $1,180 in the near term. A top-heavy dollar would suggest markets are assured of prolonged near-zero interest rate policy in the U.S.,” he said.

Spot gold was down 0.01 percent at $1,097.10 per ounce as of 0607 GMT (1:07 a.m. EST), compared to New York’s notional close of $1,097.25.

On Friday spot gold hit a low of $1,081.90, its lowest since December 23. Silver, platinum and palladium hit multi-week lows on Tuesday.

U.S. gold futures for February delivery inched down 0.1 percent to $1,096.70 per ounce, compared to $1,098.30 at the close on the COMEX division of the New York Mercantile Exchange.

The Federal Open Market Committee (FOMC) ends a two-day meeting on Wednesday, and policymakers are expected to keep interest rates near zero and indicate whether they will stick to plans to wind down an emergency asset purchase programme by March.

The meeting assumes significance as it takes place against the backdrop of a furious Senate debate over Chairman Ben Bernanke’s reconfirmation.

Bernanke’s current term expires on Sunday.

Among other precious metals, spot platinum was $1,513.50 per ounce, down over 1 percent from $1,532.50 at New York’s notional close but off a three-week low of $1,497.00 hit on Tuesday.

Palladium was up about 0.3 percent at $426.25 per ounce and silver rose 0.7 percent to $16.84 per ounce.

The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at 1,111.922 tonnes as of January 26, unchanged since January 19.

Stock Market Today

(Editing by Michael Watson)

Gold steady near $1,100, Fed decision eyed