Los Angeles CA, June 18 (Tangible Investments) - by James O’Dell - Gold and Silver edged higher on Tuesday with Gold adding $0.10 or 0.01 percent to close at $1,271.85 an ounce as investors remain sidelined ahead of the Federal Open Market Committee (FOMC) meeting policy statement on Wednesday followed by Fed Chair Janet Yellen's quarterly press conference. Silver gained $0.07 or 0.36 percent to close at $19.78 an ounce, while the Gold/Silver ratio fell to 64.30.
"Ahead of (the end of) tonight's FOMC meeting, no one wants to take either side, and investors are waiting on the sidelines until the meeting concludes," said Commerzbank's Daniel Briesemann. The Fed is expected to leave interest rates unchanged at current near zero levels and to trim another $10 billion from its monthly bond purchases as the central bank continues to unwind its massive quantitative easing (QE) program.
Meanwhile, Gold and crude oil both posted gains last week after the Al-Qaeda linked Sunni militant group known as the Islamic State of Iraq and al-Sham, or ISIS, captured Mosul, Iraq’s second largest city, and is now advancing on Baghdad. Since Iraq declared a state of emergency following the fall of Mosul to Sunni insurgents last week, Brent crude prices have jumped more than $5.
In a note, Bank of America Merrill Lynch analysts said oil prices could spike another $40-$50 per barrel to never-before-seen levels. “Gold’s correlation with oil has strengthened of late, driven by growing tensions in Iraq,” said UBS AG analysts, including Edel Tully, in a report on Tuesday. The 120-day correlation between Gold and WTI was -0.06 on Monday, compared with -0.1 on June 11.
"Geopolitical headlines still have the capability to spark prices higher, but for the moment, we think Fed uncertainties will dominate," said Edward Meir of INTL FCStone.
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