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Gold Price Gains Ahead of Fed Meeting

Gold Price Gains Ahead of Fed Meeting

October 22, 2012 - The price of gold gained during Monday trading ahead of the Federal Reserve’s two-day Federal Open Markets Committee meeting that carries the expectation of an announcement on interest rates for Wednesday.

U.S. gold futures for December delivery gained $3.00 to $1,726.80 per troy ounce on the Comex division of the New York Mercantile Exchange. The spot price of gold traded at highs of $1,728.80 per troy ounce and reached an overnight price of $1,714.40 per troy ounce, a six-week low.

George Gero, a precious metals strategist at RBC Wealth Management, wrote in a note that a wait and see attitude is prevailing ahead of the FOMC’s two-day meeting. Traders are carefully looking to the headlines for inflationary signs while re-examining sell stops and buy stops.

U.S. silver futures for December delivery gained $0.27 to $32.37 per troy ounce as the U.S. dollar index lost 0.04 percent.

Uncertainty over the Spanish bailout continued to bring some pause to markets, though the ability of the incumbent conservative party to hold onto favor in Spanish regional elections does indicate the country will likely soon request a bailout from the EU. The news of the regional Spanish elections is the first indication in weeks that Spain will proceed officially to request a bailout, a step that the markets have been anticipating for some weeks. It is widely thought the Spanish request for a bailout with initiate the latest bond-purchasing program announced by the European Central Bank, which will immediately affect currencies and wider financial markets.

The FOMC meeting this week will provide the first official update to the progress made since the Federal Reserve announced its open-ended mortgage-backed securities purchasing program in mid-September. On its inception, the Federal Reserve said it would continue the program until it witnessed a prolonged strengthening in the labor market and overall economic conditions.

Gold began a rally on the announcement of the bond-purchasing program, commonly known as Quantitative Easing 3, but the rally has come under pressure after long-positions initiated by hedge funds and large speculators failed to perform as well as hoped, repeatedly drawing near the $1,800 per troy ounce level, but never breaching it.

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer -

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