Gold futures edge up as Fed meeting begins

Published: July 26, 2016 10:48 a.m. ET

Gold in a ‘fierce tug of war’ with U.S. rate hike prospects and risk aversion: analyst

Gold futures edged a bit higher Tuesday, after posting declines over the last two trading sessions, as investors await hints from the U.S. Federal Reserve on the timing of the next interest-rate increase.

The Fed will conclude a two-day policy meeting on Wednesday. While no monetary-policy moves are expected, its statement will be watched closely for clues to future action.

Gold for August delivery on Comex GCQ6, -0.02% rose 80 cents, or less than 0.1%, to trade at $1,320.30 an ounce, after tallying a loss of nearly 1% in the last two sessions. September silver SIU6, +0.19% also added 5.8 cents, or 0.3%, to $19.705 an ounce.

“Gold is currently entangled in a fierce tug of war with U.S. rate hike expectations and risk aversion from concerns over the global economy,” said Lukman Otunuga, FXTM research analyst, in a note.

“Although it is widely expected that U.S. rates will not be increased in July, a hawkish-sounding statement could punish gold further consequently opening a path below $1,308,” said Otunuga. “On the other hand, if concerns over the global economy continue to elevate, then the metal may remain buoyed as investors flock to safe-haven safety.”

For now, gold is searching for direction “as the combination of dollar strength, anxiety ahead of the central bank meeting and lingering Brexit uncertainties keep the metal in limbo,” he said.

The dollar DXY, -0.05% was trading slightly lower against major rivals. A weaker dollar can support commodities priced in the unit as it makes them cheaper for users of other currencies.

U.S. equities saw mixed trading Tuesday, with the Dow Jones Industrial Average DJIA, -0.44% trading lower for a second session after notching a record high last week.

Other metals traded on Comex inched higher. October platinum PLV6, +0.98% rose $10.50, or 1%, to $1,098.90 an ounce, while September palladium PAU6, +0.68% added $5.90, or 0.9%, to $694.65 an ounce. September copper HGU6, +0.56% added less than a cent to $2.225 a pound.

Among the exchange-traded funds, the SPDR Gold Trust GLD, +0.43% rose 0.4% and the iShares Silver Trust SLV, +0.63% climbed 0.7%. The VanEck Vectors Gold Miners ETF GDX, +2.06% added 2.2%.