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Gold futures fluctuate near 2-month high ahead of Fed minutes

Published 08/19/2013, 09:06 AM
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Investing.com - Gold futures swung between small gains and losses on Monday, but held near the highest level in two months as investors awaited further indications over the timing of the Federal Reserve’s widely expected reduction in monthly bond purchases.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,368.20 a troy ounce during U.S. morning hours, down 0.2%.

Gold prices held in a range between USD1,367.10 a troy ounce, the daily low and a session high of USD1,384.00 a troy ounce, the strongest level since June 18.

Gold futures were likely to find support at USD1,304.50 a troy ounce, the low from August 9 and near-term resistance at USD1,391.35, the high from June 17.

The December contract settled up 0.75% at USD1,371.00 a troy ounce on Friday. Gold prices rose 4.5% last week, the biggest gain since the week ending July 12.

The precious metal has rebounded 14% since hitting a three-year low of USD1,180.15 a troy ounce on June 28, as cheaper prices led to increased physical demand.

Market players were looking ahead to the minutes of the Fed’s July meeting, due out on Wednesday, for further indications as to when the central bank may start to unwind its USD85 billion-a-month asset purchase program.

Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would end its quantitative easing program sooner-than-expected.

U.S. data on initial jobless claims and the housing sector later in the week will also be closely watched.

Gold traders have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Fed to reduce its bond purchases.

Any improvement in the U.S. economy was likely to reinforce the view that the central bank will begin to taper its bond purchase program in the coming months.

An exit from the stimulus would deal a heavy blow to gold, which has thrived on demand from investors who buy gold to hedge against the inflationary risks of loose monetary policies.

Elsewhere on the Comex, silver for September delivery declined 0.85% to trade at USD23.12 a troy ounce. Futures turned lower after hitting a fresh 14-week high of USD23.60 a troy ounce earlier in the day.

Silver future prices surged 11.7% last week, the biggest weekly advance since September 2008. Prices are up 21% since hitting a three-year low of USD18.19 on June 28, placing it in bull-market territory.

Meanwhile, copper for September delivery slumped 1.1% to trade at USD3.327 a pound. The industrial metal rose to a ten-week high of USD3.380 a pound on Friday.

The red metal gained 1.55% last week, the second consecutive weekly advance.

The industrial metal was boosted after a raft of upbeat global economic data fuelled hopes for higher demand for the metal.

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