It’s the Fed and the Fed and the Fed again. With traders are holiday around the globe and data light, the Federal Reserve is the main event. Although the FOMC minutes are a top tier event and are usually on center stage, they will have more importance to traders today as trading volume is down, news is light with politicians and traders on summer vacation and little data scheduled on the global economics calendar. This puts the FOMC minutes in the center ring under the big top. Regardless of the reading of the minutes markets should be volatile. Traders are now positioning themselves ahead of the release. Gold prices pared the initial losses as a stronger dollar and easing bond yields supported prices. Uncertainty regarding the Fed’s bond buying program also swung gold prices between gains and losses. Demand for US gold coins has eased in recent weeks as buying from retail investors slowed down amid recovering gold prices. Russia increased its gold reserves to 32.2 million troy ounces in July from 32 million troy ounces in June. Gold prices internationally are expected to remain in range as investors would await the FOMC meeting minutes to get cues on the future course of Fed’s bond buying program.
A recent survey showed that a majority of economists expect the Fed to announce a tapering plan in September and suggest that the Fed will cut back their asset purchases by 10 billion US dollars. Gold is trading at 1367.70 down by $4.90 in the Asian session. Gold futures recovered yesterday to close higher on COMEX, as investors were encouraged by prospects for seasonal demand from Asia as the market awaited release of the latest US Federal Reserve policy-meeting minutes.
Gold holdings of SPDR gold trust, the largest ETF backed by the precious metal, increased to 914.12 tons, as on August 20. Silver holdings of ishares silver trust, the largest ETF backed by the metal, increased to 10,555.7 tons, as on August 20. Silver has taken a major tumble as trader’s book profits. Silver is down by 81 pips this morning trading at 22.99 after holding this week above the $23 price level.
The dollar index, which measures the US unit against six rivals, edged down to 81.238 from 81.255 on late Monday, after swinging between losses and gains. The dollar nose dives late yesterday to trade in the upper 80 range and rebounded this morning to trade at 81.00
Copper futures traded steadily on Tuesday but eased this morning to trade at 3.323, with traders reluctant to place large bets ahead of the release of Chinese manufacturing data and details from the Federal Reserve’s most recent policy meeting. Copper prices rose on Tuesday as a weaker dollar supported prices. However, fears of bond tapering by Fed limited the upside in prices. The global nickel market was in surplus by 74,200 tonnes in the first six months of the year, according to the International Nickel Study Group. Base metals are likely to go down on caution ahead of FOMC meeting minutes and Chinese and Euro zone manufacturing numbers tomorrow.
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