Gold Traders Take a Snooze as Volatility Drops to One-Year Low

  • Market finds ‘short-term equilibrium,’ BMO’s Tai Wong says
  • Futures trading volume at 35 percent below 100-day average

Gold trading has gone quiet again as investors await the next clue on the timing of any U.S. interest-rate increase by the Federal Reserve.

The precious metal’s 30-day historical volatility has slumped to the lowest in a year. Aggregate trading in Comex futures was 41 percent below the 100-day average for this time, data compiled by Bloomberg show. Open interest, a tally of outstanding contracts, is down 13 percent from a record in July.

Traders are taking a pause after gold surged 27 percent this year, driven by mounting speculation that central bankers will be slow to raise rates. Low rates are a boon to gold because it doesn’t offer yields. Fed Chair Janet Yellen is scheduled to speak on Aug. 26 at an annual symposium in Jackson Hole, Wyoming. The odds of a U.S. rate hike don’t go above 50 percent until March 2017, Fed funds futures data show.

“The market has found short-term equilibrium, with strong bullish bias keeping prices elevated but insufficient impetus as yet to push us to new highs,” Tai Wong, the director of commodity products trading at BMO Capital Markets Corp. in New York, said in an e-mail. “The next impetus driver should be Yellen at Jackson Hole.”

Gold futures for December delivery rose 0.3 percent to $1,347.50 an ounce at 1:43 p.m. on the Comex in New York, swinging from a loss of as much as 0.2 percent.

On Friday, investors pared their holdings in exchange-traded funds backed by gold by 13 metric tons, the most since Dec. 2, data compiled by Bloomberg show.

In other metals:

  • Silver futures gained on the Comex. Palladium futures rose on the New York Mercantile Exchange, while platinum futures slipped.
Before it's here, it's on the Bloomberg Terminal.