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Gold Gains as Dollar Weakens Before Fed Policy Statement Today
By Halia Pavliva and Nicholas Larkin
Aug. 12 (Bloomberg) -- Gold advanced as the dollar slipped before a Federal Reserve statement on interest rates and the economy, boosting the appeal of precious metals as alternative assets. Silver gained, while platinum and palladium declined.
The dollar fell as much as 0.5 percent against a basket of six major currencies as Fed policy makers prepared to comment later today. The central bank won’t change its target interest rates, according to 47 economists surveyed by Bloomberg. Bullion typically gains when the dollar falls.
“I’m looking at position-squaring” before the Fed policy makers’ statement, Al Abaroa, a senior commodities strategist at OptionsPro Corp. in Plantation, Florida, said by e-mail. “The thought of a rate change is muted but underscored by policy shifts. The implications could be important on the dollar.”
Gold futures for December delivery rose $1.90, or 0.2 percent, to $949.50 an ounce at 11:32 a.m. on the New York Mercantile Exchange’s Comex division. Earlier, the price slid as much as 0.6 percent.
Bullion for immediate delivery in London advanced $1.43, or 0.1 percent, to $947.53 an ounce, halting the longest slide in five months. The spot price dropped 2.2 percent in the past five sessions.
The Fed is set to release its policy statement at about 2:15 p.m. in Washington. The central bank may say that U.S. economic growth later this year will be faster than policy makers anticipated, while committing to keep interest rates at historic lows, according analysts including Sean Callow, a currency strategist at Westpac Banking Corp. in Sydney.
‘Short the Dollar’
“The Fed will be positive on the economy but they most likely won’t change their quantitative-easing program,” Callow said. “There’s still concern about the outlook and whether they’ve done enough and if lending is picking up. If you had to be short or long, I would be short on the dollar.”
A short position is a bet an asset will decline.
Gold’s “near-term direction is likely to depend on the reaction to the Fed statement and whether the statement bolsters risk appetite or prompts a reduction in exposure,” James Moore, an analyst at TheBullionDesk.com in London, said in a report.
The metal increased to $947.25 in the London afternoon “fixing,” the price used by some mining companies to sell their output, from $943.50 in the morning fixing. Gold has dropped as much as 3.2 percent in London since reaching a two- month high of $971.68 an ounce on Aug. 6. The price climbed to a record $1,032.70 in March 2008.
ETF Investments
Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell for a third day, sliding 3.06 metric tons to 1,065.49 tons as of yesterday, data on the company’s Web site show. The fund reached a record 1,134.03 tons on June 1.
Silver futures for September delivery gained 18 cents, or 1.3 percent, to $14.525 an ounce in New York.
Platinum futures for October delivery fell $5.50, or 0.4 percent, to $1,239.60 an ounce, and palladium futures for September delivery dropped $2.15, or 0.8 percent, to $273 an ounce in New York.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; To contact the reporters on this story: Halia Pavliva in New York at hpavliva@bloomberg.net.
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