Johannesburg - Gold was little changed, holding Friday’s decline ahead of central bank meetings in the US and Japan this week as traders looked for any signals of policy changes. Silver retreated along with other precious metals.
Although the Fed isn’t expected to raise rates on Wednesday, investors are waiting for guidance on the central bank’s thinking around inflation expectations and risks to global growth that may dictate future policy.
“We expect the market to be quiet until after the Fed meeting,” said Simona Gambarini, a commodities economist at Capital Economics in London. “The Fed may hike potentially in June, but it will depend on the language used in the press conference afterwards - highlighting risks to global growth or hinting they may raise rates sooner rather than later.”
Gold has rallied in 2016 on surging demand for haven assets as concerns over the global economy give pause to the Fed’s policy-tightening path while the Bank of Japan has taken steps to boost growth. The BOJ will expand stimulus at its meeting on Thursday, according to a slim majority of economists surveyed by Bloomberg.
Bullion for immediate delivery was down 0.1 percent at $1 232.51 an ounce at 11:13 a.m. in London, adding to a 1.2 percent decline on Friday, according to Bloomberg generic pricing. That pared this year’s gain to 16 percent.
Also read: Gold price lifts Sibanye earnings
“With expectations of a Fed hike in the next six months already low, the market already heavily long, and physical demand muted we see little reason to jump in and buy gold,” Tom Kendall, head of precious metals strategy at ICBC Standard Bank, wrote in a note Monday.
Holdings in exchange-traded funds backed by gold were little changed at 1 756.9 metric tons on Friday, data compiled by Bloomberg show. Investors have increased holdings by 20 percent this year.
Read also: Why the rand punches above weight of SA’s economy
In other metal markets:
Silver for immediate delivery, which entered a bull market last week, declined 0.4 percent to $16.905 an ounce. The metal is near the highest since May 2015. Platinum fell 0.6 percent to $1 002.75 an ounce. Palladium dropped 0.4 percent to $600.33 an ounce
Bloomberg