Fed indecision has the gold trade grasping on economic releases for direction

GOLD prices spent the week moving back and forth within a tight US$40 range, since the US Federal Reserve said that it was unlikely to hike rates anytime soon but left the door open on timelines for tapering plans on reducing its massive hoard of bonds.

The Fed is not scheduled to meet until Sept 21-22 for a rate decision and till the next meeting, investors and traders are left grasping for clues on inflation from economic data releases. The next major meet of central bankers would be the annual Jackson Hole Symposium at end-August.

Without a definitive stand from the Fed, the precious metals market is going to react more aggressively to data reports and Fed speak. This market behaviour was vividly illustrated this Wednesday when a price spike was triggered by weaker-than-expected jobs data in the United States. Traders chased prices higher to the top of last week's trading range then plunged after strong US services industry activity data and hawkish remarks from Fed vice-chair Richard Clarida on interest rates pressed gold prices back to where they started the day.