Spot gold prices remain in negative territory Wednesday, as market participants await the results of the U.S. Federal Reserve’s two-day policy meeting. Prices initially ranged from $1618/23 during Asian hours before declining to around $1615.90 during the early stages of the European cash equity opening, as the risk theme in Europe corrected back modestly from yesterday’s strong advance. Spot gold prices have since declined to intra-day lows of $1611.99 where light bids around $1612 managed to contain price. Medium bids are now showing around $1600/02 with a break here leaving the precious metal prone to test critical support at $1591/93. A convincing breach of $1592 prior to the Fed announcement will leave gold prices looking extremely vulnerable, with the market already pricing in some sort of monetary easing from the Fed. Recent price action observed in gold and global equities now suggest that the Fed’s bond buying scheme, dubbed “Operation Twist”, may be extended beyond its June deadline. Gold longs seeking some flavour of possible QE3 may now be left disappointed.
EasyForexNews Research Team