Looking past the FED meet in to the Gold future

Precious metals, such as Gold and Silver, have been trading in a range for the past few weeks, as the market is trying to digest the various view given by the different FED officials. The vocal FED speakers have been hawkish and this has led to a heavy confusion among the Gold and Silver traders.

If the Federal Reserve hikes the interest rates, then traditionally the price of Gold and Silver should fall.

In the recent times, Gold prices have seena sharp jump of $ 50 in a single day from the level of 1260. The next important level for Gold is 1305 and this FOMC meet could be a game changer for the precious metals, i.e., Gold and Silver.

The big market players have poured $ 303 million into precious-metal ETFs recently. The prices are expected to reach $ 1,385.63 an ounce by the end of the current year, according to the average estimate in a survey conducted by 16 participants at the Denver Gold Forum, the 27th annual gathering of mining executives, hedge funds, bankers and analysts that drew the attention of more than 1,100 attendees. The forecast is 5.1 per cent above Tuesday’s closing futures price.

In the first half of the year investors piled into Gold as yields fell below zero on more than $ 8 trillion of government debt in developed markets. Most survey participants said the Federal Reserve’s interest-rate policy will continue to be the driving factor for the metal, which benefits as a store of value when borrowing costs are low. The other big questions on the minds of Gold watchers are the U.S. election and the stability of the global economy.

In a comment, Randall Oliphant, the chairman of the World Gold Council, said he has never seen a circumstance when so many different types of people and entities are buying Gold.

Interestingly, Gold had the best first half in almost four decades, rallying 25 per cent, as the Fed held off on further rate increases and the other central banks boosted stimulus to support growth. While prices this quarter have changed very little, the metal still remains attractive. Investors poured $ 303 million into exchange-traded funds backed by precious metals over the past week, helping keep holdings in gold-backed ETFs near a three-year high.

Not all analysts have the same views. While some are citing the price of Gold to be around $ 1,385.63 an ounce by the end of the year, others are expecting to see it at $ 1,325 an ounce at the same time based on the prospect of Fed rate hikes.

We have to wait forthe FED clue before anymore dissection of the future Gold price movement. If any hawkish view point is heard in tonight’s meet, we can see a breach of the 1305 level and the price could go further down to as low as 1260. On the other hand, if the FED remains doveish, an upside of 1360 should not be ruled out in the coming few days.

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