* Spot gold to drop to $1,626 – technicals
* Coming Up: U.S. FOMC rate decision; 1630 GMT
(Adds prices)
By Lewa Pardomuan
SINGAPORE, April 25 (Reuters) – Gold held around $1,641 per
ounce on Wednesday, underpinned by stronger equities, but
investors were also looking for hints of another round of
quantitative easing when the U.S. Federal Reserve ends its
two-day meeting.
Previous rounds of asset purchases by the Fed weakened the
dollar and boosted U.S. and global stocks. The central bank is
expected to reiterate its intent to keep benchmark U.S. interest
rates near zero over the next two years, which could burnish
gold’s safe-haven appeal.
Bullion struck a 2012 high around $1,790 in late February
after the Fed at the time said it would keep interest rates near
zero until at least by the end of 2014.
Gold hardly moved at $1,641.31 per ounce by 0632
GMT, having risen as high as $1,648.91 on Tuesday as the Dow
and the S&P; 500 jumped after strong earnings and
upbeat outlooks from big manufacturers.
“I don’t think they will announce the QE3, but Bernanke’s
speech may offer some hints. We don’t know, but we can see that
other nations have already cut interest rates,” said Ronald
Leung, director of Lee Cheong Gold Dealers in Hong Kong.
“I think $1,650 or $1,655 will be the cap for the time
being. We can see the downside at $1,625.”
The Fed is due to release a statement outlining its views
on policy and the economy at about 1630 GMT, followed by a news
conference by Fed Chairman Ben Bernanke, who is likely to be
peppered with questions on the chances of more easing
Shares rose across Asia ahead of the Fed’s policy meeting,
boosted by firm U.S. corporate earnings, signs of an improving
U.S. housing market, and healthy demand for euro zone sovereign
debt.
Despite occasional support from equities, a brighter U.S.
economic outlook and subsiding risks from the European debt
crisis have reduced investor interest in gold, dealers said.
In the Netherlands, the biggest opposition parties refused
on Tuesday to back austerity cuts needed to meet EU budget
targets after the government fell, deepening the crisis in a
nation probably facing a long period of uncertainty until
elections.
“As long as interest rates are low it’s good for
commodities, but it seems the euro zone is suffering,” said
Leung of Lee Cheong Gold Dealers.
“Speculators are not as aggressive as they used to be; they
just wait and see. They are looking at the stock market and
maybe bonds. The stock market in the U.S. is not performing too
badly this year.”
U.S. gold futures for June were at $1,642.20 per
ounce, down 0.10 percent.
Price volatility could spike ahead of Wednesday’s May COMEX
options expiry, as call and put options investors look to profit
from heavy bets at the $1,650 strike price. There are currently
about 10,000 lots in calls and about 30,000 contracts in puts at
the popular price, traders said
“Last night, customers sold gold when it rose to $1,648, but
this morning we’ve seen buying from Indonesia and Thailand,
although the volume is low,” said a physical dealer in
Singapore.
“Most people actually expected gold price to come down,
that’s why they are not so keen to enter the market. There’s a
bit of buying from India,” said the dealer, referring to the
world’s top consumer.
Argentina added to its gold reserves in September 2011 as
the price began to retreat from record highs, International
Monetary Fund and government officials said on Tuesday,
reporting the country’s first such purchase in six years.
Precious metals prices 0632 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1641.31 -0.42 -0.03 4.96
Spot Silver 30.78 -0.01 -0.03 11.16
Spot Platinum 1544.74 5.54 +0.36 10.89
Spot Palladium 664.97 1.44 +0.22 1.91
COMEX GOLD JUN2 1642.20 -1.60 -0.10 4.81 6538
COMEX SILVER MAY2 30.77 0.02 +0.08 10.23 1684
Euro/Dollar 1.3198
Dollar/Yen 81.40
COMEX gold and silver contracts show the most active months
(Editing by Sugita Katyal)
