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Gold futures trade in tight range ahead of Fed decision

Published 03/13/2012, 04:26 AM
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Investing.com - Gold futures traded in a tight range on Tuesday, swinging between modest gains and losses as investors stuck to the sidelines ahead of the outcome of a key meeting of Federal Reserve policymakers later in the day.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,700.95 a troy ounce during early European morning trade, easing up 0.05%.      

The April contract traded in a range between USD1,698.85, the daily low and a session high of USD1,706.15 a troy ounce.

Gold futures were likely to find support at USD1,677.55 a troy ounce, the low from March 9 and short-term resistance at USD1,714.15, Monday’s high.

Traders were awaiting the outcome of a Federal Reserve policy meeting later in the day. The meeting comes after Friday’s robust U.S. employment data, which showed that the U.S. economy added 227,000 jobs in February, beating expectations for a 210,000 gain.

The upbeat data diminished expectations for a fresh round of asset purchases by the Federal Reserve to help stimulate economic growth.

However, the Wall Street Journal reported last week that the Fed is considering a strategy that would allow it to undertake another round of bond buying, while lowering the risk of inflation.

Credit Suisse said in a report over the weekend that it does not expect new policy or communications initiatives to arise from Tuesday’s meeting, saying the meeting was likely to be a more routine affair than the policymakers’ last meeting in January.  

Meanwhile, jitters over Greece’s debt crisis subsided after euro zone finance ministers indicated that the debt-strapped country would receive formal approval for its second bailout early this week.

Head of the Eurogroup of finance ministers, Jean-Claude Juncker, said Monday there was "no doubt" that a second bailout for Greece, worth EUR130 billion, would be approved later in the week.

However, worries about Europe's debt crisis will not fade away with the completion of the Greece deal, amid renewed concerns over the fiscal health of Spain and Portugal and lingering worries over downbeat growth prospects in the region.

Elsewhere on the Comex, silver for May delivery rose 0.35% to trade at USD33.53 a troy ounce, while copper for May delivery climbed 0.9% to trade at USD3.872 a pound.

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