Fed's signals on rate hike likely to weigh on gold

Gold is trading largely unchanged at around $1,165 per troy ounce in the run-up to tomorrow's meeting of the US Federal Reserve. 

According to figures from the International Monetary Fund, not only China and Russia (see Commodities Daily from 8 and 21 October) but also Kazakhstan and Ukraine topped up their gold reserves in September. By contrast, Mexico and Turkey sold gold again. 

"If the Fed were to signal a possible rate hike before the year is out, this would presumably put pressure on the gold price and therefore also on other precious metal prices given the market positioning of speculative investors", says Commerzbank. 

Central banks remain on the buying side on balance, however, and thus serve as an important crutch for the gold price.