Bullion market holds its breath

THE GOLD market is holding its breath before a speech by Federal Reserve (Fed) chairwoman Janet Yellen tomorrow that may indicate when the US central bank will raise interest rates.

Bullion has moved less than 0.2 percent each day this week and a measure of 30-day price volatility is at the lowest since December, data compiled by Bloomberg show.

Gold’s 26 percent rally this year has stalled as investors hunt for guidance on the timing of rate increases. Several policymakers have signalled that tighter policy may be on the cards this year. Higher borrowing costs usually hurt the appeal of bullion, which doesn’t pay interest.

“Gold remains well and truly stuck ahead of the Jackson Hole speech,” said Ole Sloth Hansen, the head of commodity strategy at Saxo Ban in Copenhagen, said.

“Following the post-Brexit surge, most of the action has been provided by the dollar, which also remains undecided at this time.”

Bullion for immediate delivery was little changed at $1 337.46 (R18 186.80) an ounce by 11.20am in London, according to Bloomberg generic pricing. On the Comex in New York, trading volume was 33 percent lower than the 100day average for the time of day.

The odds of a rate hike by December have climbed to 54 percent from 51 percent on Monday and 36 percent at the start of the month,

The boards of directors at eight of the 12 regional Fed banks sought last month to increase the rate on direct loans from the Fed to 1.25 percent from 1 percent, the central bank said earlier this week. The votes can signal whether a bank’s president favours a change in the main policy rate – Bloomberg.