Shoshone Silver/Gold Mining Co., Inc. (fka SHSH)

[the cork]

Spot Gold 1627.40, Silver 28.78, Up A Tad; Fed Meeting In Focus
Jun 19, 2012 By Francesca Freeman

--Spot gold treads water as investors await the start of the Federal Reserve's two-day rate-setting meeting
--Gold seen vulnerable to selling, should the Fed fail to stoke stimulus hopes
--Euro performance seen key gold driver in coming weeks

Spot gold is slightly higher in Europe Tuesday, but lacking momentum as investors tread cautiously ahead of the start of a much-anticipated meeting by the U.S. Federal Reserve later in the global day.

At 0910 GMT, spot gold was just 0.2% higher on the day at $1,630.15 a troy ounce.

Gold is currently in a "holding pattern" ahead of the Fed's two-day rate-setting meeting, said David Govett, head of precious metals at Marex Spectron. Market participants will be looking for any clues on whether the Fed will act to support the economy, given recent poor U.S. economic data.

"I think the market is positioned long ahead of the meeting and if tomorrow afternoon there is no mention of quantitative easing or such like, we will definitely see disappointed selling," said Mr. Govett. "Ahead of any announcements, the market will remain thin, nervous and jumpy," he added.

Gold is often sought as an alternative currency and hedge against inflation at times of loose monetary policy.

A firmer euro-dollar is also providing some support for gold Tuesday, according to analysts. Since gold is priced in dollars, it is more affordable to other currency-holders when the greenback softens.

The relative strength of the euro against the dollar is likely to remain a key driver of gold prices in the weeks ahead, said HSBC analyst James Steel.

Either a sharp boost in market confidence regarding the euro zone or increased expectations of U.S. quantitative easing is required to buoy the euro significantly, according to HSBC.

"A limited near-term upside to the euro would be likely to limit upside for gold, too, we believe," said Mr. Steel.

At 0909 GMT, the euro was trading at $1.26036, up 0.2% on the day. Euro resistance currently sits at around $1.2750, according to HSBC's currency strategists.

In other precious metals Tuesday, spot silver was 0.4% higher at $28.820/oz, spot platinum was up 0.6% at $1,484/oz and spot palladium was up 0.1% at $628.25/oz.

According to Commerzbank technical analyst Axel Rudolph, silver prices remain in danger of slipping further within the next couple of weeks.

While the metal may still retest the psychologically important $30/oz level, support at $27.21/oz and $26.74/oz should eventually give way, bringing the major support area at $26.36/oz-$26.02/oz back into play, he said.

"Failure here will lead to the 200-week moving average at $23.30/oz being eyed. We retain our medium-term bearish view while silver stays below $31.49/oz," Mr. Rudolph added.

Write to Francesca Freeman at [e-mail]
(END) Dow Jones Newswires
06-19-12 0544ET
Copyright (c) 2012 Dow Jones & Company, Inc.

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