Gold Stuck in `No Man's Land' Before Fed Chief Gives Outlook

(Bloomberg) -- Gold fell as traders awaited the Federal Reserve’s decision on U.S. interest rates and braced for the prospect of further increases.

Prices have been treading water, hugging close to the $1,200-an-ounce level that’s been the norm since late August. Bullion’s losses Wednesday come as expectations rise that the Fed will further tighten monetary policy beyond September.

Gold Stuck in `No Man's Land' Before Fed Chief Gives Outlook

Gold has been becalmed in recent weeks as investors grew accustomed both to the well-flagged likelihood of further rate rises from the Fed, as well as the bruising trade conflict between Washington and Beijing, which has fanned demand for the dollar. While the metal has lost ground this year as exchange-traded holdings fell, the pace of losses has leveled off.

Bullion for immediate delivery was down 0.5 percent at $1,195.20 an ounce at 1:48 p.m. in New York. Prices have fallen 8.3 percent this year as the Fed hiked rates twice. Gold futures for December delivery dropped 0.5 percent Wednesday to settle at $1,199.10 on the Comex.

“Since even the most astute G-10 traders are struggling for dollar direction, gold remains mired in no man’s land, smack dab in the middle of the well-worn $1,190-$1,210 range,” Stephen Innes, Singapore-based head of Asia Pacific trading with Oanda Corp., said in a note. “The focus will fall on the Fed’s forward guidance and Fed Chair Jay Powell’s press conference.”

After Wednesday’s decision -- at which investors largely expect another quarter-point rise in borrowing rates -- Chairman Powell will hold a media conference on the outlook. His remarks offer an opportunity to assess the state of the world’s largest economy as well as the trade-war risks.

A quarter-point increase in rates “should not spark any further reaction from the gold price,” Commerzbank AG analysts including Daniel Briesemann, said in a daily note. “What will be more important is the outlook” from Powell.

In other precious metals, silver futures dropped on Comex, while platinum and palladium advanced on Nymex.

©2018 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.