Gold rises above $1300 in early trade, Fed meeting eyed
ecPulse
2014-07-29 08:46AM UTC
Gold traded above $1,300 an ounce for the second day on Tuesday, as investors awaited the outcome of the Federal Reserve`s policy meeting tomorrow. The sentiment for bullion was boosted again by geopolitical tension in Eastern Europe and the Middle East ahead of Wednesday`s Federal Open Market Committee (FOMC) announcement and Friday`s employment report. The precious metal is still holding grounds above $1,300 an ounce, but still stuck in rangebound following the 0.3% drop in the previous session. On Wednesday, the FOMC will announce the rate decision for July, with expectations to keep the benchmark interest rate at a record-low 0.25%, as well as the completion of the Federal withdrawals for the quantitative easing policy, bringing down the program to $35 billion $25 billion. The QE3 program will be reduced by buying government bonds to 15 billion dollars from 20 billion, with a reduction of real estate-backed bond program to $10 billion from $15 billion. The Fed is expected to continue withdrawals until October 2014 amid growing expectations that the US central bank will hike the interest rates earlier than expected. The US jobs report, due to be released Friday, is expected to indicate more evidence on the health of the US labor market, which has recently witnessed a remarkable development after a very low unemployment rate, expected to stay at 6.1% in July, while the consensus are calling for 225-thousand gain in non-farm payrolls this month, from the previous increase of 288 thousand. As of the 04:37 a.m. ET, Spot Gold was up 0.60% at $1,310.19 an ounce, compared with the previous close at $1,302.39. The metal reversed yesterday`s slide, benefiting from tension between the West and Russia, after the US and European Union leaders agreed on Monday to extend sanction on Russian business, defense and energy sectors. In Gaza, the fighting continued between the Palestinian militant group Hamas and Israeli defense Forces (IDF), one day after both parties announced a new 24-hour ceasefire on Monday. Among other precious metals: - Spot Silver rose 1.19% to $20.67 an ounce - Spot Platinum was flat at $1,487.75 an ounce - Spot Palladium rose 0.66% to $885.55 an ounce The Dollar steadied against a six-currency basket ahead of the Fed`s policy outcome and key US economic data later this week, while traders continue to look for more signs of improvement in the world`s largest economy. Monday`s economic news is led by another weak report out of the housing sector, this time pending home sales which are not pointing to strength for final sales of existing homes. The Dow posted a fractional gain to 16,982. The USDIX hovered near a six-month high near 80.07 before easing to the opening level around 80.00. A second month of weakness in Case-Shiller home price data would be the latest indication of weak demand in the housing sector. Separaetly, consumer confidence in the US is expected to improve slightly in July, with data from the Conference Board probably marking a six-year high for consumer sentiment gauge. According to Bloomberg, the consensus forecast came as follows: - S&P/CS 20 City (MoM)(MAY) 0.30% vs. 0.19% - S&P/CS Composite-20 (YoY)(MAY) 10.00% vs. 10.82% - Consumer Confidence (JUL) 85.5 vs. 85.2
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