Spot gold to remain rangebound-technicals

Gold prices edged up on Wednesday, as worries about a worsening euro zone debt crisis supported safe-haven sentiment ahead of the conclusion of a U.S. Federal Reserve policy meeting.

The Fed, which has made clear it is intent on taking further steps to lift growth, is expected to decide to stock up on longer-term Treasury notes to boost a faltering economy.

In the latest sign that U.S. growth has stalled, new construction of U.S. homes fell more than expected in August, keeping pressure on President Barack Obama to do more to help the economy.

“The expectation of some sort of easing from the Fed and poor economic data will make it difficult for gold to break sharply below $1,800,” said Li Ning, an analyst at Shanghai CIFCO Futures.

Spot gold edged up 0.3 percent to $1,808.69 an ounce by 0556 GMT, after a 1.4-percent rally in the previous session.

Gold is headed for a 20-percent jump in the third quarter, its biggest quarterly rise in 25 years.

U.S. gold inched up 0.2 percent to $1,811.90.

Technical analysis suggested that spot gold may move sideways in a range of $1,761.94 and $1,811 an ounce during the day, Reuters market analyst Wang Tao said.

Market participants moved to the sidelines ahead of the Fed statement.

“Those who hold short positions built up in the beginning of the week might want to square them off,” said a Hong Kong-based trader. “It is a wild card to call what is going to come out of it.”

If the Fed announces measures short of another round of quantitative easing, gold is likely to slip below $1,800 as disappointed investors might sell bullion to cover potential losses in equities, he added.

Asian stocks edged up and the euro clawed back lost ground as investors waited for the Fed statement.

Gold’s rally will extend beyond $2,000 an ounce in the next year, but will not match the record-breaking 50 percent surge of the last 12 months, according to an annual survey of gold investors and analysts at the world’s biggest bullion traders event. – Reuters

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