News Column

Gold Ends Slightly Higher With Focus On Fed, Iraq

June 18, 2014

WASHINGTON (Alliance News) - Gold futures ended slightly higher on Wednesday, as investors await the outcome of the US Federal Reserve's two-day policy meet that concludes later in the day, with focus on Fed's views on growth and its outlook for interest rates. Reports of continued fighting in Iraq also was an added impetus to gold prices, with reports of jihadists attacking the country's largest oil refinery.

At the conclusion of its 2-day FOMC meeting, the Fed is scheduled to announce its monetary policy decision. The central bank is widely anticipated to hold interest rates unchanged, while it is expected to continue trimming the size of its asset purchase program by another USD10 billion. About half an hour later, Fed Chair Janet Yellen will host the customary post-meeting press briefing.

The situation in Iraq continues to be of concern with Islamic militants advancing towards Iraq's capital, having attacked the country's biggest oil refinery with machine gun fire and mortars, according to news reports. Refinery sources said a spare-parts warehouse at the periphery of the complex caught fire in the overnight attack.

Iraqi forces, backed by Shia and Kurdish militias, are reported to have retaken several towns and are holding back an advance by Sunni militants north of Baghdad. Fierce fighting is on between government forces and heavily armed jihadists belonging to the al-Qaeda-linked Islamic State in Iraq and the Levant (ISIS) in several parts of the country.

Gold for August delivery, the most actively traded contract, moved up USD0.70 to close at USD1,272.70 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday.

Gold for August delivery scaled an intraday high of USD1,274.80 and a low of USD1,266.50 an ounce.

On Tuesday, gold futures snapped a six-day gain to end lower with developments in Iraq and Ukraine in focus.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged down to 782.62 tons on Wednesday from its previous close of 782.88 tons on Tuesday.

The dollar index, which tracks the US unit against six major currencies, traded at 80.54 on Wednesday, down from its previous close of 80.60 late Tuesday in North American trade. The dollar scaled a high of 80.65 intraday and a low of 80.47.

The euro traded higher against the dollar at USD1.3573 on Wednesday, as compared to its previous close of USD1.3547 late Tuesday in North American trade. The euro scaled a high of USD1.3583 intraday and a low of USD1.3540.

In economic news from the US, the nation's current account deficit rose more than expected to USD111.2 billion in the first quarter. Economists expected a deficit of USD99.8 billion for the quarter, compared to a deficit of USD81.1 billion in the fourth quarter.

Meanwhile, Bank of England policymakers unanimously decided to leave the key interest rates unchanged in June and once again hinted at a possibility of a rate hike as early as this year. At its monetary policy meeting held on June 4 and 5, all nine members of the Monetary Policy Committee voted to retain the record low 0.50% interest rate and quantitative easing at GBP 375 billion, the minutes showed Wednesday.

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Source: Alliance News

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