Gold Ends Lower Ahead Of Fed Policy Meet Outcome

(RTTNews) - Gold futures snapped a two-day gain to end slightly lower on Wednesday, with investors awaiting the outcome of the two-day U.S. Federal Reserve policy that will conclude later today.

The Fed is widely expected to hold the interest rate unchanged and also announce a further scale back in its asset purchase program. Simultaneously, the central bank would also release its updated quarterly forecast.

After the conclusion of its 2-day FOMC meeting, the Federal Reserve will release its policy statement at 2 pm ET. At 2:30 pm ET, Federal Reserve Chair Janet Yellen will host a press conference to give further insights into the policy decisions.

While most traders expect the central bank to hint at plans to tighten monetary policy, some are of the view that the Fed will keep its pledge to keep rates near zero for a "considerable time."

Gold for December delivery, the most actively traded contract, slipped $0.80 percent to settle at $1,235.90 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday.

Gold for December delivery scaled an intraday high of $1,240.10 and a low of $1,233.40 an ounce.

On Tuesday, gold futures ended up $1.60 or 0.1 percent at $1,236.70 an ounce, as the dollar trended lower against some major currencies ahead of the much anticipated U.S. Federal Reserve policy meet. Some bargain hunting after previous week's setback too supported gold.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged down to 784.22 tons on Wednesday, from its previous close of 788.40 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 84.09 on Wednesday, down from its previous close of 84.11 late Tuesday in North American trade. The dollar scaled a high of 84.18 intraday and a low of 83.94.

The euro trended higher against the dollar at $1.2965 on Wednesday, as compared to its previous close of $1.2960 late Tuesday in North American trade. The euro scaled a high of $1.2981 intraday and a low of $1.2938.

In economic news from the U.S., consumer prices unexpectedly declined in August for the first time since May 2013, data released by the Labor Department showed.

The consumer price index dropped by a seasonally adjusted 0.2 percent in August after inching up by 0.1 percent in July. Excluding food and energy prices, the core consumer price index was unchanged in August after ticking up by 0.1 percent in each of the two previous months. Economists had expected core prices to edge up by 0.2 percent.

A National Association of Home Builders report on Wednesday showed U.S. homebuilder confidence in September jumped to its highest level in almost nine years, with a firming job market helping to unleash pent-up demand for new homes.

The report said the NAHB/Wells Fargo Housing Market Index jumped to a reading of 59 in September from 55 in August, while economists had expected the index to inch up to 56. The jump lifted the index to its highest level since hitting 61 in November of 2005.

Meanwhile, a report from the Commerce Department showed U.S. current account deficit to have shrunk 3.8 percent to $98.5 billion in the second quarter, from a revised $102.2 billion in the previous quarter. Economists expected a current account deficit of $114 billion for the quarter.

Elsewhere, China is pumping in about $81 billion or CNY 500 billion as stimulus into five of its largest lenders to boost liquidity amid slowing growth for a period of three months, media reports said Wednesday.

The People's Bank of China will provide CNY 100 billion each to the five state-owned banks through its standard lending facility. Analysts reportedly equated the latest move to a half-percentage point cut in the reserve ratio. The five largest banks include Industrial & Commercial Bank of China, Agricultural Bank of China, China Construction Bank, Bank of China and Bank of Communications Co.