SINGAPORE, Sept 26: Gold traded in a narrow range today and largely held on to overnight gains of nearly 1 percent as an upcoming Chinese holiday kept investors on the sidelines and their focus turned towards the US debt ceiling talks.
The US Congress is deeply divided on raising the $16.7 trillion statutory limit on government borrowing, and a failure to do so would push the world’s biggest economy into a default.
Treasury Secretary Jack Lew pleaded for quick action as he projected an Oct. 17 date when borrowing capacity would be nearly exhausted and only $30 billion would be left in his agency’s checking account.
Gold – seen as a safe haven and alternative investment – rose to a record $1,920 an ounce in September 2011, partly on fears over the first U.S. Debt ceiling crisis which was resolved at the last minute.
‘We have seen this story play out before and essentially it becomes an exercise in politicking,’ said one precious metals trader in Hong Kong. ‘People are looking at it due to the lack of news elsewhere.’
‘From the last Federal Reserve statement until now, gold hasn’t really gotten out of the nearby range. A lot of people are waiting for a breakout in either direction,’ the trader said.
Spot gold eased 0.2 percent to $1,330.75 an ounce by 0331 GMT, after gaining 0.8 percent in the previous session.
The Fed said earlier this month that it would not begin tapering its stimulus measures this month, defying expectations for a $10 billion cut to the $85 billion bond-buying stimulus.
Gold, seen as an inflation hedge, has fallen more than 20 percent this year on fears that the U.S. Central bank would begin scaling back its easy-money policy.
Investors are watching U.S. Economic numbers to determine whether the bank could still begin reducing its bond purchases this year.
‘Gold could receive something of a bid over the short-term, as worries rise over the debt ceiling talks, but we doubt whether this variable alone will be enough to keep the complex elevated for long,’ INTL FCStone analyst Edward Meir said in a note.
WEAK PHYSICAL BUYING
Chinese markets will be closed next week for the National Day holiday, keeping prospective buyers on the sidelines.
Buying over the last two weeks has been soft, dealers said, adding that demand could pick up once China comes back from the holiday.
Indian customs cleared some of the imported gold that was lying at airports and meant for exports after processing, trade body officials said on Wednesday, a move that could restart shipments after a gap of more than two months.
Precious metals prices 0331 GMT
Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1330.75 -2.24 -0.17 -20.53 Spot Silver 21.68 -0.07 -0.32 -28.40 Spot Platinum 1422.24 -3.96 -0.28 -7.35 Spot Palladium 719.50 -1.00 -0.14 3.97 COMEX GOLD DEC3 1331.30 -4.90 -0.37 -20.56 9471 COMEX SILVER DEC3 21.73 -0.16 -0.74 -28.31 3846 Euro/Dollar 1.3518
Dollar/Yen 99.00
COMEX gold and silver contracts show the most active months
(agencies)
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