Gold Ends Lower Ahead Of Fed Minutes

(RTTNews) - Gold futures ended lower for a second straight session on Wednesday, as investors await the U.S. Federal Reserve' monetary policy statement, with anticipation of a potentially huge announcement from the Fed later today.

Policy makers are expected to provide strong hints about when they intend to raise interest rates. Most Fed watchers think they will signal rate hikes will begin in September as long as the economic recovery stays on track.

The Fed is expected to reveal its policy statement at 2 p.m. Eastern time, just as regular trade ends on the Nymex. This will be followed by a news conference by Chairwoman Janet Yellen's at about 2:30 p.m. Eastern time.

Investors also continued to monitor the developments in Europe, with no progress on resolving Greece's financial woes. Failure to reach an agreement with creditors can put Greece on the 'painful' path of an exit from the euro and spark an uncontrollable crisis, Greece's central bank warned on Wednesday.

Gold for August delivery, the most actively traded contract, dropped $4.10 or 0.4 percent to settle at $1,176.80 an ounce, on the Comex division of the New York Mercantile Exchange on Wednesday.

Gold for August delivery scaled an intraday high of $1,181.70 and a low of $1,173.90 an ounce.

On Friday, gold prices dropped $4.90 or 0.4 percent to settle at $1,180.90 an ounce, as the dollar strengthened and investors opting for the riskier equity assets, after the U.S. Federal Reserve began its highly anticipated two-day policy meet.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 701.90 tons on Wednesday from its previous close of 703.98 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 94.91 on Wednesday, down from its previous close of 94.96 on Tuesday in late North American trade. The dollar scaled a high of 95.14 intraday and a low of 94.75.

The euro trended higher against the dollar at $1.1267 on Wednesday, as compared to its previous close of $1.1249 in North American trade late Tuesday. The euro scaled a high of $1.1293 intraday and a low of $1.1226.

On the economic front, eurozone construction output increased for a second straight month in April, although the rate of growth halved from the previous month, data from Eurostat showed Wednesday. Construction production in the euro area 19 countries rose 0.3 percent month-over-month in April, following 0.6 percent increase in March, revised from 0.8 percent.

U.K. unemployment held steady at its lowest level in nearly seven years during the three months to April, while pay growth was the strongest in four years, exceeding economists' forecast, figures from the Office for National Statistics showed Wednesday. The ILO jobless rate for the February to April period was 5.5 percent, down from 5.7 percent logged for the three months to January. It was also lower than the 6.6 percent recorded in the same period last year.

The unemployment rate was in line with economists' expectations and was the lowest since April-June 2008, when the figure was 5.4 percent. The number of unemployed declined by 43,000 from the previous three months to 1.81 million, the lowest since the June to August period of 2008.

Average earnings including bonuses grew 2.7 percent year-on-year during the three months to April. Economists had forecast 2.1 percent growth. The latest increase was the highest since June to August 2011, when pay grew 2.7 percent.

U.K. households were more downbeat about their finances in June, a survey by Markit Economics and financial information provider Ipsos Mori revealed Wednesday. The index dropped to 43.8 in June from 45.5 in May. The reading was the lowest score seen so far this year.

Elsewhere, Japan posted a merchandise trade deficit of 215.974 billion yen in May, the Ministry of Finance said on Wednesday. That beat forecasts for a shortfall of 258.8 billion yen following the downwardly revised 55.8 billion yen deficit in April (originally -53.44 billion yen).

Meanwhile, the Bank of Greece in its annual report said, "The conclusion of a new agreement with our partners is of the utmost importance to fend off the immediate risks to the economy, reduce uncertainty and ensure a sustainable growth outlook for Greece."

"An exit from the euro would only compound the already adverse environment, as the ensuing acute exchange rate crisis would send inflation soaring," the central bank added.