Gold Holds Mostly Steady in Asia as Investors anticipate Fed, BoJ Next Week

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On September 13, 2016, Gold price eased in Asia after an early increase as investors anticipate the Federal Reserve’s recent decision on interest rates at next week’s Federal Open Market Committee meeting.

On Thursday, gold held mostly steady in Asia with central bank meetings in the U.S. and Japan next week setting a high stakes stage for markets.

Delivery  of gold for December on the Comex division of the NYMEX flanked between gains and losses and was last cited flat at $1,326.05 a troy ounce.

Similarly, on the Comex, delivery of silver futures for December drop 0.18% to $19.032 a troy ounce. Copper futures increased 0.09% to $2.154 a pound.

The Bank of Japan’s September 21 decision was taken up one more level in market eyes, proposing a further move on negative interest rates could be declared on the same day the Federal Reserve decision on a rate hike takes place, perhaps producing spillover effects.

“At stake is whether BoJ Governor Haruhiko Kuroda will announce steps that stem from a review of monetary policy called for at the last meeting, which some analysts say stem from intense pressure by Prime Minister Shinzo Abe to get a clearer handle on effective policy options,” according to the report.

Goldman Sachs expects the BoJ “to maintain its current policy framework at next week’s meeting and rather use the comprehensive assessment to increase the visibility of future policy direction.”

Also, the indecision over the scheduling of the next Federal Reserve rate hike continued.

On Monday, Fed Governor Lael Brainard stated that the circumstance to tighten up monetary policy in the approaching months is less convincing.

The statement reduced expectations for a rate hike at the Fed’s next meeting, which is set for September 20-21. According to the source a 15 percent chance of a rate hike for next week.

Suddenly, gold prices resisted near the lowest level in nearly two weeks during Europe’s session on Wednesday, in advance of a carefully watched U.S. retail sales report on Thursday, which is anticipated to shape the market short term interest rate expectations.

On Thursday, the Commerce Department will publish data on August retail sales, perceived as another piece of the puzzle on the scheduling of future U.S. interest rate increases.

The consensus prediction is that the report will present retail sales plunged 0.1% previous month, after holding flat in July. Core sales are predicted to inch up 0.2 percent, after declining 0.3% a month before.

Decreasing retail sales over time associate with weaker economic development, while increasing sales indicate a strengthening economy. Consumer spending accounts for as much as 70 percent of U.S. economic progress.

Markets are pricing in just a 15% possibility of a rate hike at the Federal Reserve’s September 20-21 meeting, according to the report.

Gold is sensitive to change in U.S. rates. A slow path to higher rates is perceived as less of a risk to gold prices than a rapid series of increases.

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