Gold was little changed above the lowest in almost two weeks in New York as investors weighed whether the Federal Reserve will keep borrowing costs low and on signs physical buying is picking up.
The Fed starts a two-day meeting today, when policy makers are expected to say they’ll keep interest rates at a record low for an extended period even as they end bond buying as the economy improves. Traders have cut the probability the central bank will raise borrowing costs by October 2015 to a 49 percent chance from 79 percent odds on Sept. 30.
The Bloomberg Dollar Spot Index was little changed after reaching the lowest in almost a week. An index of pending U.S. home sales released yesterday rose less than forecast in September. More physical demand, particularly from Asia, has given “underlying support” to gold, James Steel, an analyst at HSBC Securities (USA) Inc., said in a note.
Gold rebounded from this year’s low set Oct. 6 “in part due to waning expectations that the Federal Reserve could hike interest rates earlier,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a report today. “While an end to QE is widely expected, what would determine gold’s future trajectory is the kind of forward guidance the Fed provides concerning interest rates.”
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