Gold Market Paralyzed by Indecision on the Fed’s Next Rate Move

24-Apr (Bloomberg) — Investors can’t seem to make up their mind on the gold market.

It’s been almost two weeks since prices sustained a move in either direction for more than a day, the longest period since September, according to data compiled by Bloomberg. Prices fluctuated as reports this week showed conflicting data on the U.S. housing market and orders for business equipment. The Federal Reserve begins a two day policy meeting on April 28.

Traders are parsing the data for clues on whether the economy is clipping along fast enough to warrant a gain for interest rates. Higher rates diminish the allure of the metal, which generally only gives returns through price gains, spurring investors to favor assets with better yield prospects such as equities and bonds. Faster expansion also helps to strengthen the dollar, cutting demand for gold as an alternative.

Gold prices “remain in no-man’s land ahead of a rate decision,” Nicholas Snowdon, an analyst at Standard Chartered Plc in London, said by telephone. “The mixed data is a continuation of the uncertainty over the timing of the expected rate hike.”

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PG View: Consolidation in the lower quintile of the four-year range is an opportunity to accumulate. The Chinese certainly seem to think so.