Gold rose a second day in New York on speculation prices near an eight-month low will spur more buying as the Federal Reserve begins a two-day policy meeting.
Gold futures’ 14-day relative-strength index was at 31.2 today, after holding below the level of 30 the previous five days, signaling to some traders that prices may be poised to rebound. In China, the world’s largest gold buyer, volumes for the benchmark spot contract on the Shanghai Gold Exchange rose to a two-month high today, the latest data show.
Bullion is heading for the first quarterly loss this year as the Bloomberg Dollar Spot Index advanced to a 14-month high this week on speculation that the Fed will raise interest rates after it ends its bond-buying program. The Federal Open Market Committee meets today after data showed yesterday industrial production fell in August for the first time in seven months.
Gold has risen on “short covering as traders trimmed some of their bearish bets ahead of the start of the two-day FOMC meeting,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a report today, referring to closing out bets on lower prices. “We might be in for some consolidation as traders are likely to hold to the sidelines until tomorrow. Market participants are expecting a hawkish tone from the Fed tomorrow.”