GOLD TIPTOES INTO DECEMBER WITH CAUTIOUS GAIN AHEAD OF COUNTDOWN TO FED DAY

WASHINGTON, Dec 2 (Bernama-Sputnik/RIA Novosti) -- Gold has parlayed its four-month rally into a positive start for December, but the shiny metal’s prices could drift, even turn volatile, over the next week without clear signs for a Federal Reserve rate cut, a senior precious metals trader says in his outlook, reported Sputnik/RIA Novosti.

“You might see some short-term swings if the Fed doesn’t deliver the cut it’s supposed to on December 10,” Phillip Streible, chief metals strategist at Blue Line Futures, told RIA Novosti. “I believe the direction of the rates is clear — it is coming down — but markets need to be convinced, and gold needs to see those signals.”

Gold saw a cumulative gain of almost 25 per cent between January and April amid US-China trade rhetoric, dollar weakness and central bank buying of the precious metal for reserve-building purposes. Profit-taking, technical selling triggered by charts indicating an overbought market and intermittent dollar strength led to relatively flattish prices for gold between May and July.

The upward momentum picked up again in August, resulting in a flurry of record highs for gold, as speculation mounted that the Fed would embark on interest rate cuts to prop up a steadily weakening US labour market. The central bank reduced rates by quarter percentage points back-to-back in September and October.

Expectations for the Fed to do another quarter percentage point cut on December 10 were at 87.6 per cent, according to a rate prediction tool monitored by US exchange group CME. Despite the high odds, markets are uncertain if growing inflationary pressures would convince the central bank to leave rates in their current range of 3.75 per cent-4 per cent.

In Monday’s session, gold futures for February delivery on New York’s Comex settled at US$4,265 per ounce, up by a modest US$10.10, or 0.2 per cent, despite hitting a six-week high at US$4,299.35.

The spot price of gold, which tracks real-time trading in physical gold, was at US$4,235.62 per ounce by 18:30 US Eastern Time (23:30 GMT), up US$3.33, or 0.1 per cent.

Notwithstanding its cautious start for this month, Streible is optimistic of a new record high for gold in December as familiar themes of inflation-hedging and central bank buying kick in. “I think so long as we hold above US$4,250, there’s a fairly good chance of us making a run for new highs.” 

Gold’s last record highs were US$4,398 for futures and US$4,381.60 for spot, both in October.

Year-to-date, both the futures and spot markets are up more than 61 per cent each.

--BERNAMA-SPUTNIK/RIA NOVOSTI