The meeting of the US Federal Reserve is drawing ever closer, and the gold price is continuing to trend sideways at around $1,110 per troy ounce amid thin trading. In fact, the lowest trading volume so far this year was recorded on the Comex in New York at the beginning of the week, totaling a mere 81,400 contracts.
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. Net long positions in silver were increased, on the other hand, though this lent only brief buoyancy to its price.
Market participants are clearly reluctant to position themselves ahead of the interest rate decision, preferring instead to wait on the sidelines. The publication of US retail sales figures for August gave no impetus to the price. Although they fell somewhat short of market expectations, they nonetheless showed that US consumers are still in the mood for shopping. The figures confirm the Fed's impression that the US domestic economy is in good condition.
All the same, they give virtually no indication of which way the Fed's interest rate decision might go on Thursday. Consumer prices for August will be published in the US shortly - these are likely to have greater relevance for the Fed.
