Tuesday, 19 June 2012 17:08

PRECIOUS METALS: Gold Edges Lower While Awaiting Fed News

Written by  WSJ

--August Comex down 0.2% at $1,623.20 a troy ounce

--Investors await news from Fed on Wednesday about possible monetary easing

--Euro-zone jiggers continue to weigh on the market

   By Nicole Friedman 

NEW YORK--Gold futures edged lower Tuesday in tight trading as traders awaited news from the Federal Reserve and European leaders.

The most-actively traded contract, for August delivery, fell 0.2%, or $3.80, to settle at $1,623.20 per troy ounce on the Comex division of the New York Mercantile Exchange.

Markets are hoping that new monetary easing will be disclosed Wednesday at the end of the Fed's two-day policy-setting meeting. Central-bank easing is essentially printing money to fire economic activity. But such moves spark fears of inflation, leading to demand for gold. The metal is seen as a safe haven where wealth can be stored, and thus a hedge against inflation.

"I do think the market is set up for a bullish tone" if the Fed unveils new easing, said Logic Advisors principal Bill O'Neill.

However, gold could fall if the Fed disclosed moves that the market considers too tepid, rather than a full-bore round of quantitative easing, said Standard Bank's Walter de Wet in a note. "Should the policy change from the Fed be minor, gold (and other precious metals) may actually sell off," he said.

The Fed meeting was more in focus for traders than news from Europe Tuesday, O'Neill said, but euro-zone economies continued to be a concern. Sovereign-debt crises in the euro zone could hurt gold futures, as traders may rush to trade in their hard assets for the security of more-liquid dollars.

Traders could gain clearer direction from European leaders at the June 28 European Union summit, Barclays wrote in a note.

"The market is expecting from Europe a roadmap towards greater financial and fiscal integration" to be announced at the summit, the bank wrote.

Settlements (ranges include open-outcry and electronic trading): 
London PM Gold Fix: $1,625.50; previous PM $1,615.50 
Aug gold $1,623.20, down $3.80; Range $1,618.10-$1,632.50 
Jul silver $28.368, down 30.3 cents; Range $28.270-$28.790 
Jul platinum $1,480.50, down $3.60; Range $1,479.40-$1,492.30 
Sep palladium $629.40, down $3.75; Range $625.40-$635.90