MW: Gold rises on weaker dollar as investors await Fed
Holdings in biggest gold ETF fall to fresh five-month low
By Moming Zhou, MarketWatch
NEW YORK (MarketWatch) -- Gold futures rose on Wednesday as the U.S. dollar fell against most of its rivals ahead of the conclusion of the Federal Reserve meeting, boosting gold's appeal as an alternative investment.
The Fed's Federal Open Market Committee was to end a two-day policy meeting later in the day. Investors waited for news on whether the Fed's current monetary policy will continue. Limiting gold's gains Wednesday, holdings in the biggest exchange-traded fund backed by gold fell to a new five-month low.
On the Comex division of the New York Mercantile Exchange, the most active December gold futures rose $1.80, or 0.2%, to $949.40 an ounce. The front-month August contract was also higher, up $1.70, or 0.2%, at $947.50 an ounce.
"Gold traders [are] on hold prior to the Fed meeting," said George Gero, a precious-metals trader for RBC Capital Markets. "A small trading range seems likely as [the] dog days of summer are here and momentum traders have pulled back awaiting news."
Interest-rate futures on Wednesday indicated traders no longer expect the Fed to raise its target overnight borrowing cost for banks, known as the federal-funds rate, by the end of this year, but still see a chance of an increase by next spring.
Meanwhile, markets are expecting the Fed to allow its $300 billion Treasury-buying program to end over the next six weeks. See related story.
Signs of tightening could reduce inflation worries and curb gold's appeal as a hedge against rising prices.
"The market is likely to remain cautious ahead of the FOMC decision," said Suki Cooper, a precious-metals analyst at Barclays Capital, in a note. "A more optimistic accompanying statement would be dollar-positive, which in turn is likely to expose gold to growing downside risk."
Holdings in SPDR Gold Trust (GLD 92.94, +0.15, +0.16%) , the biggest gold ETF, fell more than 3 metric tons to stand at 1,065.49 metric tons Tuesday, the lowest level since March 13. Holdings are now down nearly 70 metric tons from their record above 1,134 metric tons hit in early June.
"With more investor redemptions expected, gold will remain at risk to further pressure," said James Moore, an analyst at TheBullionDesk.com.
In other ETFs, holdings iShare Silver Trust (SLV 14.26, +0.17, +1.21%) , the biggest silver ETF, stood near a record at 8,824.67 metric tons.
In other metals, September silver rose 16 cents, or 1.1%, to $14.505 an ounce. October platinum fell $4.90, or 0.4%, to $1,240.20 an ounce, while September palladium slid $4.15, or 1.5%, to $271 an ounce.
September copper gained 4.1 cents, or 1.5%, to $2.7775 a pound.
