Investors keep close eye on steady gold

Metal was under scrutiny ahead of Fed testimony yesterday

Gold steadied yesterday, holding above this week’s near four-month low ahead of a closely watched speech by US Federal Reserve Chair Janet Yellen.

Investors were expecting to be watching Yellen’s semi-annual monetary policy testimony before Congress for clues on the Fed’s attitude towards inflation, and on when the US central bank will start reducing its $4.5 trillion (Dh16.5 trillion) balance sheet. That would likely push up bond yields, boosting the opportunity cost of holding bullion, In the major physical markets, Commerzbank said in a note that higher imports into number two consumer India, reported the previous day, could prove to be the last to show such strength for a while.

“Indian gold traders are likely to have brought purchases forward because a goods and services tax was introduced on gold purchases in India on 1 July,” it said. and pushing gold lower.

Spot gold was at $1,217.18 an ounce 1120 GMT, little changed from $1,217.31 late on Tuesday but well above Monday’s near four-month low of $1,204.45 an ounce. US gold futures for August delivery were up $1.60 an ounce at $1,216.30.

“For now markets are in wait and see mode ahead of this afternoon,” Mitsubishi analyst Jonathan Butler said. “The next rate rise has been fairly well signposted, and we have a degree of consensus between the market and what the Fed are saying with regards to a third interest rate rise this year.”

The dollar held close to its lowest in more than a year against the euro, keeping gold broadly underpinned, while stock markets edged higher in light trading.