Gold edges higher, Fed decision eyed

28/01/2010 00:00 AST

India gold futures edged higher on Wednesday helped by a weaker rupee as well as continuing physical offtake, with investors awaiting the outcome of Fed's policy meeting for direction, analysts said. The most-traded gold February contract on the Multi Commodity Exchange (MCX) 0.26 percent higher at Rs 16,506 per 10 grams at 10:47 a.m.

The Indian rupee dropped to its lowest level in more than three weeks on the back of an early drop in the local sharemarket which played catch-up with the rest of Asia as trading resumed after a day's break. A weak rupee makes the dollar-quoted asset expensive. India gold buying has witnessed a continuous pick-up below $1,100 an ounce level.

"Moves would be dependent on Fed policy decision.. range seen is 16,420-16,590 rupees," said Kunal Shah of Nirmal Bang Commodities. The Federal Open Market Committee (FOMC) ends a two-day meeting on Wednesday, and policymakers are expected to keep interest rates near zero and indicate whether they will stick to plans to wind down an emergency asset purchase programme by March.

"In gold, 16,350 could be the lower boundary of the range, resistance could be seen at 16,600," said Amrut Deshmukh, senior analyst with Way 2 Wealth Securities. Open interest for February gold on MCX was at 12,860 lots, down from 13,621 a day earlier.


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