Gold rallies ahead of Fed decision, copper trade muted

Gold futures climbed on Wednesday morning in the US after the Bank of Japan (BoJ) issued a dovish monetary statement but investors are still cautious while awaiting the Federal Reserve’s decision due later today.

Comex gold for December delivery gained $12.40 or 0.9 percent to $1,330.60 per ounce. Trade has ranged from $1,310.90 to $1,331.90.

But copper was moving in the opposite direction – metal for December settlement on the Comex division of the New York Mercantile Exchange was last down 0.85 cents or 0.4 percent to $2.1565 per pound. Trade has ranged from $2.1505 to $2.1705 so far today.

Although the BoJ kept interest rates unchanged, the Japanese central bank said it would switch from bond-buying to targeting long-term interest rates.

Still, the main market event remains the conclusion of the Federal Open Market Committee’s (FOMC) two-day meeting later today.

Weeks of speculation and hawkish rhetoric from various central bankers have led to lacklustre trading throughout the past few weeks but market participants are largely discounting a September rate rise.

After better-than-expected inflation data late last week, however, about 60 percent of investors see the Fed lifting rates in December.

“While we doubt the Fed will surprise the market with a rate rise today, more-hawkish rhetoric is likely to increase the downside pressure if the Fed greenlights a move in December,” James Moore, research analyst at FastMarkets, said.

In trade data, Chinese imports of unwrought copper and copper alloy rose 1.5 percent year-on-year but fell 3.2 percent month-on-month to 300,000 tonnes in August, according to the country’s General Administration of Customs.

The metal also largely ignored a report from the International Copper Study Group showing the global refined copper industry was in a production deficit of around 306,000 tonnes in the first half, which equates to a seasonally adjusted deficit of about 227,000 tonnes. 

In European markets, Germany’s DAX and France’s CAC-40 were both up 1.1 percent while the dollar was virtually unchanged at 1.1148 against the euro.

In other commodities, light sweet crude (WTI) oil futures on the Nymex rose 75 cents or 1.7 percent to $44.80 per barrel while the most active Comex silver contract stood at $19.705 per ounce, up 42.8 cents.

(Editing by Mark Shaw)

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