Gold Little Changed Below 1-Week High as Economy Weighed

Gold was little changed, after falling from a one-week high yesterday, as investors weighed signs of an improving U.S. economy against tension over Ukraine and in the Middle East.

The Federal Reserve concludes a two-day meeting today. Data are forecast to show the U.S. economy rebounded last quarter, and the dollar reached an almost four-month high against 10 major currencies. Interest-rate increases may come “sooner and be more rapid than currently envisioned” if the labor market continues to improve more quickly than anticipated, Fed Chair Janet Yellen told lawmakers this month.

Geopolitical tensions helped gold gain 8.2 percent this year. The U.S. and European Union sought to put more pressure on Russia by targeting banking, energy and defense industries for sanctions in another attempt to get President Vladimir Putin to back down in Ukraine. The Israeli military pushed deeper into the Gaza Strip to target new sites in the Palestinian territory, before the army said there will be a four-hour humanitarian cease-fire today in parts of the territory.

“Investors would want to see whether or not the central bank is starting to think about some sort of a timetable as to when it will conceivably raise rates,” while improving data due this week will probably strengthen the dollar and pressure gold, Edward Meir, an analyst at INTL FCStone Inc. in New York, wrote in a note. “However, the unsettled geopolitical backdrop makes us reluctant to short the metal at this stage.”

Gold for December delivery was little changed at $1,300.90 an ounce by 7:42 a.m. on the Comex in New York. Prices fell 0.4 percent yesterday, retreating from a one-week high of $1,314.60. Bullion for immediate delivery was little changed at $1,299.64 in London, according to Bloomberg generic pricing.

Trading Volume

Futures trading volume was 22 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg show.

U.S. equities reached a record this month. Economists forecast data due Aug. 1 will show employers boosted payrolls in July by more than 200,000 jobs for a sixth-straight month.

“Investor interest has waned while other asset classes deliver much stronger returns, namely equity markets,” Morgan Stanley analysts including Joel Crane wrote in a report today. “We are cognizant sentiment surrounding gold is likely to remain relatively volatile in the face of continued geopolitical instability and extension of consensus views over the timing of the U.S. interest rate tightening cycle.”

Silver for September delivery was 0.2 percent higher at $20.615 an ounce in New York. Platinum for October delivery was little changed at $1,485.40 an ounce. Palladium for September delivery gained 0.4 percent to $881.95 an ounce. It reached a 13-year high of $890 on July 17.

Platinum and palladium have gained this year as restricted output from a five-month mine strike that ended in June in South Africa, the biggest platinum producer, and rising usage in cars added to supply shortages. Russia is the top palladium supplier, with South Africa the next largest.

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