Gold was trading relatively flat on Friday ahead of next week’s Federal Reserve meeting.
The metal has slipped slightly this week, but generally investors have been nervy, waiting for the meeting next week.
ScotiaMocatta said: “With the Fed thought likely to increase interest rates on 16th December this could be a pivotal time for the gold market.”
By Friday afternoon, the Fed Fund Futures, a tool used to determine the likelihood of a Fed rate rise, suggested there was an 83% chance of a rise next week.
Consensus thought seems to be that if the Fed chooses to raise rates next week, there will be a sharp sell-off in gold, as it becomes less attractive to interest yielding assets.
But ScotiaMocatta reckons the rise is already priced into the market, and therefore gold will be less affected than some think.
“In October and November gold prices swung between being bullish when the Fed was dovish and being bearish when hawkish… this changed in December as good US data and a hawkish Fed led to a rally in gold when logic would suggest price weakness,” the bank said.
“This implies a US rate rise is now discounted and that may lead to an unwinding of bearish trades anticipating the rate rise.”
Broker Investec said Fed chair Janet Yellen’s comments during the press conference will be “as relevant for the markets as the actual decision,” as she may give clues on the frequency of further hikes.
Gold was US$2 higher at US$1,074 on Friday.
Elsewhere, silver was 1.55 lower to US$13.91 while platinum lost US$10 to US$844.
Randgold Resources down 48p to 4,114p
Fresnillo down 1.3p to 671p
Anglo American down 23p to 295p