Gold Inches Higher Ahead of Fed Meeting

By Georgi Kantchev Features Dow Jones Newswires

Copper prices kicked off the week higher, with the base metal benefiting from a weaker dollar.

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The price of copper rose 0.2% to $6,859.50 a metric ton in late morning trade. Gold, meanwhile, was broadly flat at $1,272.30 a troy ounce.

The decline in the greenback makes commodities like copper and gold cheaper for those who use other currencies. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was down 0.1% midmorning on Monday.

Analysts say copper's rally this year--the metal is up 24% since January--should continue as the global economy improves and the market experiences supply constraints.

"Underpinned by recent years' insufficient investment in new mine projects, we believe copper is entering a sustained a bull run," analysts at ICBC Standard Bank said in a report.

ICBC estimates that mine disruptions have caused 1.89 million tons of lost production so far this year, up from 1.8 million for the whole of 2016.

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Later this week, traders will be keeping an eye on the Federal Open Market Committee when it holds its final monthly meeting before a widely expected rate increase in December. A rate increase could have implications for the dollar, which usually gets a boost from hawkish Fed policy decisions.

Investor bets were last giving a 97% probability to the likelihood of a December rate increase, according to data from CME Group.

Among precious metals, silver was up 0.1% at $16.76 a troy ounce, palladium rose 0.6% to $963.60 a troy ounce and platinum rose 0.8% to $921.80 a troy ounce.

Among base metals, zinc rose 1.1% to $3,207.50 a metric ton, aluminum fell 0.3% to $2,177.50 a metric ton, tin rose 0.7% to $19,885 a metric ton, nickel rose 0.1% to $11,600 a metric ton and lead fell 0.5% to $2,420 a metric ton.

Write to Georgi Kantchev at georgi.kantchev@wsj.com

Gold prices inched higher Monday, with many investors awaiting news later in the week that could swing prices.

Gold for December delivery rose 0.1% to $1,273.30 a troy ounce on the Comex division of the New York Mercantile Exchange. Price moves have been relatively muted lately since gold last breached $1,300 Oct. 16, with some analysts noting that news later in the week could give the market more direction.

On Wednesday, the Federal Reserve is scheduled to release its latest statement following a two-day meeting that could offer clues about its outlook for interest rate increases moving forward. Gold struggles to compete with yield-bearing assets like Treasurys as borrowing costs rise. Additionally, President Donald Trump is expected to announce his nominee to be the next Fed chair this week. The Wall Street Journal reported that Mr. Trump is expected to nominate Fed governor Jerome Powell as his nominee.

Investors will also be paying attention to Friday's monthly jobs report for the latest reading on the U.S. economy, which could affect expectations for future rate increases. Signs of inflation could also boost gold prices because some investors use the precious metal as a hedge against higher consumer prices.

"There's some interest coming back into [gold] down at these levels," said Bob Haberkorn, senior market strategist at RJO Futures. "There's a reluctance down here for the bulls to take anything off," he said, noting that Mr. Powell would likely continue the Fed's current approach of slowly raising rates.

The events later in the week could also swing the dollar, which inched lower Monday to make gold and other dollar-denominated commodities cheaper for foreign buyers. The WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, was recently down 0.1% coming off its best week of the year.

Many prominent members of the metals market are in London this week for London Metal Exchange week. The exchange said Monday that it is planning to launch futures contracts for battery metals such as lithium and cobalt sulfate as early as the start of 2019, the latest example of how the commodities market is hoping to capitalize on the push toward electric vehicles.

Base metals like copper and nickel could also benefit as the transportation industry change, analysts have said, because of the added demand from batteries and charging infrastructure. Copper for December delivery swung between small gains and losses and was recently up less than 0.1% at $3.1045 a pound. The industrial metal snapped a four-week winning streak last week but still sits near three-year highs.

David Hodari contributed to this article.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com and Georgi Kantchev at georgi.kantchev@wsj.com

(END) Dow Jones Newswires

October 30, 2017 10:56 ET (14:56 GMT)