Commodities: Gold down ahead of Fed meeting, oil stable in Asia trading

Gold opened lower in Asia ahead of the US Federal Reserve’s monetary policy committee meeting with markets contemplating a US interest rate rise later this year.

At 07:48 COMEX gold for July delivery was down 0.25% or $3.99 at $1,200.20 an ounce, while spot gold was also marginally down 31 cents or 0.03% at $1201.84 an ounce.

Meanwhile, news emerged over the weekend that Venezuela's central bank had converted part of its gold reserves into at least $1 billion in cash through a swap with Citibank.

Local newspaper El Nacional said the deal was reached on Friday. However, neither the Venezuelan central bank nor Citibank have commented on the deal. Continuing with precious metals, COMEX silver was also down 0.45% or 7 cents at $16.37 an ounce.

Meanwhile, oil markets retreated on profit taking with both benchmarks trading lower in Asia. The WTI front month contract was down 1.35% or 77 cents at $56.22 per barrel while Brent was lower by 70 cents or 1.22% at $64.04 per barrel.

Commenting on the direction of the market, Joshua Mahony, Market Analyst, IG said oil markets appear somewhat settled at the start of the week, following a strong showing last week which saw the gains of the previous month extended.

“Whilst for many, prices around the $47 mark represented a strong buying opportunity, it is likely that this recent strength will only last for so long and with oil likely to remain in high supply, it is likely that we will see consolidation reign once more in the near future. Gold has confounded the dollar bulls by punching higher yesterday after it hit support at $1180 an ounce,” Mahony added.

Elsewhere, copper market continues to strengthen on speculation of further Chinese economic stimulus. The LME three-month contract closed up 1% or $61 at $6097 per tonne. On the soft commodities front, corn, wheat and cocoa futures were up but cotton retreated from Monday’s high.