August 19, 2015
Gold Marks Time Ahead of Fed Minutes
(Reuters) - Gold was stuck in a narrow range on Wednesday as investors waited for the minutes of the Federal Reserve's meeting last month for clues on whether the U.S. central bank might raise interest rates next month.
Bullion has found some support above $1,100 an ounce after last week's strong recovery away from a 5-1/2-year low reached in late July, helped by the uncertainty that followed China's shock devaluation of its currency.
"Whether this will be enough to keep the upward momentum going remains to be seen as we head into the Fed meeting whereby the central bank will likely raise rates," INTL FCStone analyst Edward Meir said.
"We suspect that gold will be under pressure between now and then, but we do expect a post-move rally in most commodity markets, as investors should start discounting the likelihood that the Fed may choose to stand pat after its first move, thus prompting the dollar to come off its lofty perch."
Spot gold was flat at $1,117.55 an ounce at 0224 GMT, extending Tuesday's lethargic performance.
U.S. gold for December delivery was also little changed at $1,117.10 an ounce.
A recovery in the housing sector, a strengthening job market and other upbeat economic signals suggest the U.S. central bank is on track to raise interest rates this year.
But some analysts say it might adopt a gradual approach after the first increase, following China's yuan devaluation last week.
The imminent increase in U.S. interest rates will be the first since 2006 and it has dimmed the appeal of non-interest-bearing assets such as gold.
Further bolstering the case for a speedy rate rise, data on Tuesday showed U.S. housing starts rose to a near-eight-year high in July.
However, technical charts suggest gold may have potential to test the three-week high of $1,126 touched last week and then $1,137, according to analysts at ScotiaMocatta.
"We are cautiously bullish due to the impact of the firm dollar, which has been a negative weight on the metal," they said in a note.
Spot platinum and palladium were steady and not far off multi-year lows reached recently. Miner and commodity trader Glencore is considering closing its Eland platinum mine in South Africa due to falling prices.
Silver was up 0.3 percent at $14.91 an ounce.