Gold Falls Ahead of FOMC

Gold edged lower on Wednesday as cautious investors awaited a Federal Reserve statement that could give clues on the timing of a U.S. interest rate increase.

Spot gold was down 0.3 percent at $1,178.70 an ounce by 0959 GMT. Platinum fell to its lowest since April 2009 at $1,068.75 an ounce, trading at the cheapest to gold since 2012, with a discount of more than $100 to the yellow metal.

“The Fed policy move will be the trigger for gold prices to fall towards $1,125 or just below that before the end of the year,” Deutsche Bank analyst Michael Lewis said.

“The rate move is a pretty 50/50 call between September and December and it’s very data-dependent.”

All eyes will be on the Fed’s statement due at 1800 GMT after its two-day policy meeting. This will be followed by Fed Chair Janet Yellen’s news conference half an hour later.

Analysts expect her to focus on signs the economy is recovering after a bumpy start to the year and will scrutinise her comments for pointers to the timing of the first U.S. rate rise in nearly a decade.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza