 "Gold rebounds on euro ahead of Fed meeting")
Singapore: Gold ticked higher on Tuesday as the euro rebounded although trading was cautious with investors waiting for the outcome of a Federal Reserve meeting, which could offer clues over the direction of interest rates in the world’s largest economy.
Easing expectations for the Fed to signal the need for more measures to keep interest rates low could eventually weigh on gold, which has risen around 9 percent so far this year on a near-zero US rate outlook.
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Gold added $5.04 to $1,704.09 an ounce by 0250 GMT, with support at the 200-day moving average of around $1,680 an ounce. Bullion rallied to an all-time high around $1,920 an ounce last September.
“I think everybody is staying on the sidelines. On the investment side especially, people still try to keep more cash on hand. They have no intention to buy a substantial amount of gold right now,” said Dick Poon, manager of precious metals at Heraeus in Hong Kong.
“There’s not much going on, especially on the physical side,” said Poon, adding that investors were also scrutinising Europe’s current efforts to solve the debt crisis.
The euro bounced from a one-month low to $1.3178 on Tuesday, finding support at its 55-day moving average around $1.3082 as euro zone finance ministers gave their final approval to a second bailout for Greece -the source of the currency bloc’s debt crisis.
But Tuesday’s focus would be on the Fed’s policy statement after last week’s data showed an encouraging gain of more than 200,000 jobs in February for a third straight month.
Recent signs of improvement in the US labour market are spurring economists at major Wall Street firms to rethink how aggressive the Fed needs to be in applying further monetary stimulus, a Reuters poll showed.
US April gold rose $5 to $1,704.80 an ounce, but some bullion investors were cautious after last week’s US data showed net long futures positions held by money managers, including hedge funds, posted the biggest one-week drop since August.
The dollar was on the defensive, having retreated from a seven-week high against a basket of major currencies on some caution the Fed might sound more dovish than expected at its policy meeting.
A softer dollar makes commodities priced in the greenback cheaper for holders of other currencies. Physical gold trading also slowed to a trickle in Singapore, where buyers such as Indonesia and Thailand waited for clues from other markets ahead of the Fed meeting.
“It’s all about wait-and-see. I think we can expect to see good physical demand if gold price falls below $1,700. On and off, we are still seeing some buying, but it’s not much,” said a dealer in Singapore. “Indonesia was a good buyer last week.”
In the stock market, the Nikkei share averagerose 0.5 percent due to a softer yen, while MSCI’s index of Asia Pacific shares outside of Japan also added 0.5 percent after slipping on Monday on concerns about a moderation in Chinese demand.
Reuters
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