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Gold marks time ahead of Fed minutes

[MANILA] 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 US central bank might raise interest rates next month.

Bullion has found some support above US$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 US$1,117.75 an ounce at 0607 GMT, extending Tuesday's lethargic performance.

US gold for December delivery was also little changed at US$1,117.30 an ounce.

A recovery in the housing sector, a strengthening job market and other upbeat economic signals suggest the US 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 US 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 US 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 US$1,126 touched last week and then US$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 slipped 0.4 per cent to US$986.80 an ounce and palladium dropped nearly 1 per cent to US$589.22, both 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 0.1 per cent at US$14.88 an ounce.


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