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Gold swings as shift in BoJ’s policy buoys dollar

Singapore - Gold swung after the Bank of Japan (BoJ) decided to take additional action to try to support the country’s recovery, boosting the dollar in the first of the day’s major monetary-policy announcements ahead of a statement from the Federal Reserve.

Bullion for immediate delivery fluctuated between gains and losses of at least 0.4% and traded at $1 317.40 by 08:13, according to Bloomberg generic pricing. The Bloomberg Dollar Spot Index rose 0.2%. 

Gold rallied in the first half partly on the back of low and negative interest rates. While the BOJ  kept the benchmark rate at a negative 0.1%, Governor Haruhiko Kuroda pledged to expand the monetary base until inflation is stable above 2%, and may now vary the target to control the yield curve.

Investors will turn their attention to the Federal Open Market Committee’s meeting, where traders are pricing odds of a hike at 22%.

“The FOMC will have a bigger impact than the BOJ,” Tetsu Emori, president of Emori Capital Management, said by phone. “In Asian time, most of the people are looking at the BOJ, but the more important thing is the Fed’s actions - if they leave interest rates unchanged or raise rates.”

Holdings in exchange-traded funds backed by gold lost 3.3 metric tons to 2 018.3 tons on Tuesday, data compiled by Bloomberg show. On the Shanghai Futures Exchange, gold for December delivery was up 0.3% at 285.55 yuan a gram, while silver gained 0.9% to 4 340 yuan a kilogram. On global markets, spot silver added 0.7%, palladium rose 0.4%, while platinum was up 1%.

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