Investing.com - Gold prices traded flat on Monday as the Federal Reserve and European Central Bank entered blackout periods ahead of key policy decisions which markets expect to point to further easing.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange, were little changed, up just 5 cents, to $1,426.75 a troy ounce by 8:53 AM ET (12:53 GMT).
The Fed and the ECB have begun their respective periods of avoiding public speaking and interviews ahead of monetary policy decisions, leaving markets without further input on policymakers’ outlook for movements for interest rates or stimulus.
John Reade, chief market strategist at the World Gold Council, said that last week’s Commitment of Traders report showed that the net speculative long gold position remains elevated and was essentially unchanged on the week.
Pointing to the Fed policy meeting on July 30-31, Reade said that “gold may mark time a little ahead of that”.
Just ahead of the Fed’s quiet period, Boston Fed President Eric Rosengren said after Friday’s market close that he saw no reason for the widely anticipated quarter-point cut at the upcoming meeting.
Rosengren insisted that the U.S. economy was a much more solid position than that of the euro zone or Japan where central banks are also widely expected to pursue policy easing.
“I don’t want to ease if the (U.S.) economy is doing perfectly well without the easing,” he said in an interview with CNBC.
While markets did reduce bets for a full 50 basis point cut at the end of this month, they continue to fully price in a quarter-point reduction.
Beyond just the Fed, Investing.com senior commodity analyst Barani Krishnan said that central banks worldwide have been taking an increasingly dovish stance on monetary policy to the benefit of non-yielding gold.
“The European Central Bank is widely expected to give signs of further easing this week, with market odds for a cut having even surpassed 50% on Friday. Smaller central banks from countries such as South Korea or South Africa already took action in that direction on Thursday,” he said.
That outlook for lower interest rates on a global level has spread across the fixed income market resulting in $13 trillion worth of bonds with negative yields, increasing the appeal of gold.
In other metals trading, silver futures rose 1.1% at $16.372 a troy ounce by 8:55 AM ET (12:55 GMT).
Palladium futures fell 0.6% to $1,499.95 an ounce, while sister metal platinum gained 0.3% to $854.20.
In base metals, copper traded down 0.9% to $2.728 a pound.