Gold price treading water ahead of the Fed meeting

Precious metals are slightly down at the start of the new week after their prices fluctuated - in some cases considerably - on Friday. Gold dipped temporarily below the $1,100 per troy ounce mark. In euro terms, gold dropped to €970 per troy ounce to hit its lowest level in over eight months. 

The other precious metals also found themselves under pressure in gold's slipstream - silver for instance fell for a time to a two-week low of $14.3 per troy ounce. Market participants will be focusing their attention this week on the important meeting of the US Federal Reserve, which will be announcing on Thursday whether it will be increasing interest rates before this month is out. 

The uncertainty which will continue until this announcement is made should prevent the gold price from making any significant gains in our opinion, meaning that it will probably tread water for the most part. 

"Speculative financial investors are doubtless also responsible for the recent fall in the gold price, as they reduced their net long positions by a third to 26,800 contracts in the week to 8 September, solely as the result of an increase in short positions. Because the price has fallen further since the reporting date, net long positions are likely to be even lower by now", says Commerzbank.