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Gold futures rise 1% as focus turns to Fed meeting

Published 04/27/2015, 09:44 AM
Updated 04/27/2015, 09:44 AM
Gold jumps 1% as focus turns to this week's Fed meeting

Gold jumps 1% as focus turns to this week's Fed meeting

Investing.com - Gold prices bounced off the previous session's five-week low on Monday, as investors awaited hints on monetary policy from the Federal Reserve later in the week.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery rose $10.10, or 0.86%, to trade at $1,185.10 a troy ounce during U.S. morning hours after hitting an intraday peak of $1,186.90.

On Friday, gold slumped to $1,174.10, a level not seen since March 20, before ending at $1,175.00, down $19.30, or 1.62%. Futures were likely to find support at $1,168.70, the low from March 20, and resistance at $1,203.70, the high from April 21.

Gold prices slumped $29.40, or 2.34%, last week, the second straight weekly loss and the biggest decline in seven weeks.

Market players will focus on the conclusion of the Federal Reserve's two-day monetary policy meeting on Wednesday, which could provide indications on when the U.S. central bank will start raising rates.

The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.2% to trade at 97.27 early on Monday, moving off the previous session's three-week low of 96.90.

The index ended the week down 0.62%, the second straight weekly drop, as a recent run of disappointing economic data dampened optimism over the economic recovery, fuelling speculation the Fed could delay hiking interest rates until late 2015, instead of tightening midyear.

Meanwhile, concerns over the lack of an agreement on economic reforms for bailout funds between Greece and its creditors remained in focus.

The Greek government is no closer to reaching an agreement with its international creditors over economic reforms required to access remaining bailout funds.

Athens must pay €780 million due to the International Monetary Fund on May 12, fuelling fears that the country could default on its debt be forced out of the euro zone.

Also on the Comex, silver futures for July delivery jumped 30.8 cents, or 1.96%, to trade at $15.98 a troy ounce. Silver touched a low of $15.55 on Friday, the weakest level since March 18.

Elsewhere in metals trading, copper for July delivery inched up 1.5 cents, or 0.53%, to trade at $2.768 a pound amid speculation policymakers in China will have to introduce further stimulus measures to jumpstart the economy amid lackluster growth.

Red-hot mainland Chinese shares soared, with the Shanghai Composite index surging 3% to rise above the 4,500-level for the first time in seven years on hopes of more monetary stimulus.

Since November, the People's Bank of China has introduced a series of stimulus measures, including lowering interest rates twice and cutting the reserve requirement ratios of major banks twice, in order to spur economic activity and boost growth.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption.

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