Gold Futures Little Changed as Investors Await Fed Rate Decision

Fed Decision-Day: Weighing the Impact
  • Prices have flipped between gains and losses for two weeks
  • Volume at the Comex is 39 percent below the 100-day average

Gold futures were little changed in light trading as investors awaited the Federal Reserve’s decision on whether to raise interest rates.

Fed policy makers conclude a two-day meeting on Thursday amid conflicting signals on growth, with an improving U.S. labor market and a weaker Chinese economy muddying the outlook. Aggregate open interest in gold futures was 414,000 contracts, little changed from a week earlier and down 13 percent from mid-July, while trading Thursday was 39 percent below the 100-day average.

Bullion has lost more than 5 percent this year amid concern that the Fed will raise rates for the first time since 2006, which would diminish the appeal of gold because it doesn’t pay interest. U.S. data on Thursday may add to the uncertainty, with new-home construction falling while initial jobless claims declined to the lowest in two months.

“We’re going to wait to see what will happen” with the Fed decision, George Gero, a vice president of global futures at RBC Capital Markets, said in telephone interview from New York. “You had a lot of conflicting numbers today. Part of that says raise, part of that says wait.”

Gold futures for December delivery slipped 0.2 percent to $1,116.50 an ounce as of 11:51 a.m. on the Comex in New York, after gaining as much as 0.3 percent.

Fed-fund futures show a 30 percent chance of an increase on Thursday, according to data compiled by Bloomberg. The odds climb to 63 percent by December.

“The market is leaning towards betting the Fed won’t raise rates, but it’s a relatively close call,” Jens Pedersen, an analyst at Danske Bank A/S in Copenhagen, said by phone. “With only a few hours to go, this is the only thing on people’s minds at the moment.”

Silver rose on the Comex. Platinum and palladium declined on the New York Mercantile Exchange.

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