Gold to gain slightly ahead of FOMC rate decision
After the losses incurred yesterday, the yellow metal returned to gain slightly today recovering some of the losses recorded in the past session as the heavy load of fundamentals and events awaited today from Europe and U.S. led investors to demand more of the shiny metal as a hedge against uncertainty especially with the continued conflict between Spain and the euro area region over the Spanish budget plans.
Gold added so far 0.02% or $1.20 per ounce after the opening of $1701.33 per ounce to trade in the momentum slightly higher at $1702.53 per ounce. The metal reached the highest at $1706.05 and the lowest at $1698.72 an ounce.
The euro zone finance ministers' meeting is to continue today; however, the focus will shift into Spain after the euro-area ministers reassured that Greece will obtain the second bailout package since the nation met all the requirements set by international lenders.
The conflict between Spain and the rest of the euro zone nations continues, where the euro zone finance ministers in their first test to impose targets on individual countries except Greece seem to be unable to force Spain to revise its budget plans, noting that Brussels as a start imposed deficit targets of 4.4% of GDP this year; however, Spain clarified that the Spanish target will be 5.8%, which in result made finance chiefs to revise their targets to 5.3%, but till now both parties reached no deal.
Major fundamentals are to be released from Europe and U.S. today, where the focus will be on the United Kingdom's trade balance figures, with expectations the deficit could have widened in January.
After then, the euro area region and Germany will provide markets with the critical ZEW Survey, which measures the economic sentiment and the confidence in the current situation. We expect the confidence to improve again this time, where according to the European Central Bank President Mario Draghi the Bank sees signs of stabilization and an improving level of confidence.
The retail sales figures from the world's largest economy will attract all the attention with the start of New York session, with expectations the advanced retail sales could have improved by 1.1% from 0.4% in February.
After the release of the this heavy load of fundamentals, markets will hold their grounds, awaiting the Federal Open Market Committee (FOMC) rate decision with no surprises expected this meetings, where policy makers are projected to leave rates at the virtually zero level (0.0%-0.25%).
Furthermore, the Federal Reserve isn't expected to add further stimulus this meeting due to the flow of upbeat macroeconomic fundamentals in addition to the rebound in the labor market, which showed that U.S. returned on the right track of recovery, the thing that might add strength to the U.S. dollar and therefore force downside pressures on metals and commodities in general to trade lower, but ahead of the meeting gold might remain slightly biased to the upside.
Among other precious metals, silver was a little changed, cutting 0.04% or $0.01 per ounce to trade now around $33.65 per ounce. The metal recorded a high of $33.82 and a low of $33.61 per ounce.
Platinum shed 0.21% of $3.63 per ounce as well, trading around $1691.25 per ounce, compared with the opening level of $1694.88 per ounce. The metal set the highest at $1703.00 and the lowest at $1688.00 per ounce, approaching the value of gold which has been always cheaper than platinum, but the escalating debt crisis pushed the metal in the second half of 2011 to overcome platinum.
Palladium shed 0.43% of $3.00 per ounce to $698.75 per ounce. The metal hit a high of $703.25 and a low of $698.75 per ounce, noting that it opened the session at $701.75 per ounce.