The U.S. Dollar Index, after getting as high as 86.2 last evening, slid back early this morning after marking time. Since just after 3:00, it's been trending sideways around the 86 level. As of 8:13, it was at 85.99.
A Bloomberg report, as webbed by Business Week, ascribed the rise to fears of global slowdown.
“The market is still jittery,” said Bernard Sin, head of currency and metals trading at bullion refiner MKS Finance SA in Geneva. “Weakness in equities may continue to support gold. Gold will continue to be bullish.”...The article also mentions that the holdings of the SPDR Gold Trust ETF (GLD) increased by 5.17 tonnes yesterday to a new record of 1,313.13 tonnes. That increase made up almost all of a 6.2-tonne increase in the total holdings of 10 global bullion ETFs yesterday.
“Gold is still looking well bid on its unique safe-haven status,” said Peter Tse, head of precious metals with Bank of Nova Scotia in Hong Kong. “However, the market is heavily long and we could see some profit-taking,” he said, referring to bets that prices will rise.
A Wall Street Journal report said that gold is inching higher in anticipation of the results from the FOMC meeting that ends today.
As in other markets, traders and analysts aren't expecting any surprises from the U.S. Federal Reserve Open Market Committee meeting result. Commerzbank analyst Daniel Briesemann said the market would be "looking very closely at the strength of the wording."Also mentioned as a factor by the same analyst was the most recent increase in GLD's holdings.
The Federal Reserve began its two-day policy meeting Tuesday. The central bank is widely expected to announce that interest rates will remain low for an extended period.
Mr. Briesemann said this could put the dollar under pressure, with a positive impact likely on gold prices....
The opening of regular trading added to a decline that started around 8:00, which pushed gold down to $1,241. Halting at 8:30, the metal hovered around that level for the next twenty minutes. As of 8:54, the spot price was $1,240.90 for a gain of $2.30 on the day. The Kitco Gold Index attributed -$0.80 to predominant selling and +$3.10 to greenback weakness. The U.S. Dollar Index continued to drift around the 86 level; as of 8:56, it was at 86.01.
Gold did manage to break above $1,240, but the extent of the rise wasn't that great. Still, overcoming the resistance at that level was something. The metal may well have entered a new and higher range as a result.