Gold gains ahead of much anticipated Fed Reserve announcement

Gold prices rose in Asian trading on Thursday as investors braced for a possible announcement from the Federal Reserve on plans to stimulate the U.S. economy. The Fed concludes a two-day monetary policy meeting later in the day. On the Comex division of the New York Mercantile Exchange, gold futures for October delivery were up 0.06% at USD1,732.15 a troy ounce, up from a session low of USD1,731.15 and down from a high of USD1,732.95 a troy ounce early during the session. Gold futures were likely to test support at USD1,725.25 a troy ounce, Wednesday's low, and resistance at USD1,746.55, Wednesday's high. Weak monthly jobs reports and slow economic growth rates have many betting the Fed will announce a third round of quantitative easing later Thursday. Under quantitative easing, the Fed buys assets such as Treasury holdings or mortgage-backed securities held by banks, pumping the economy full of fresh liquidity in a way that pushes down interest rates to speed up recovery. Such accommodative policies tend to weaken the dollar by design, which sends the greenback's traditional hedge, gold, rising. The metal rose on sentiment the Fed is leaning towards stimulating the economy with easing tools and less towards sticking with its wait-and-see approach used during recent months. Gold also rose on news that a German court okayed the government's participation in eurozone financial rescue activities, ending uncertainty surrounding the European Central Bank's plans to buy sovereign debt. The constitutional court ruling in Germany gives Berlin the green light to ratify the European Stability Mechanism, the continent's bailout fund, which will open the door for the European Central Bank to roll out its sovereign bond purchasing program. Elsewhere on the Comex, silver for December delivery was down 0.05% and trading at USD33.275 a troy ounce, while copper for December delivery was down 0.16% and trading at USD3.691 a pound.

Courtesy: ForexPros