Gold falls ahead of FOMC statement
Prices slipped as investors awaited news from the committee's meeting.
By Andrea Tse, TheStreet
Updated at 2:10 p.m. ET
The policymakers are expected to leave the key Fed funds target rate untouched at zero to 0.25%. However, investors and analysts are still waiting to hear more about an expected discussion of more quantitative easing measures.
Earlier today, another key piece of economic data -- housing starts -- was announced. The Department of Commerce said housing starts increased 10.5% in August to 598,000 from 541,000 in July, which was better than the 550,000 starts economists were expecting, according to Briefing.com.
Gold for December delivery settled $6.50 lower to $1,274.30 an ounce at the Comex division of the New York Mercantile Exchange. Gold today traded as high as $1,283.90 and as low as $1273.50. The U.S. dollar index was down 0.4% to $81.04, while the euro was rising 0.5% to 1.31 against the dollar. The spot gold price was losing more than $5, according to Kitco's gold index.
Also to be discussed at the FOMC meeting, according to analysts, are changes -- and the degree of those changes -- to the Fed's balance sheet. In his daily newsletter, James Moore, an analyst at TheBullionDesk.com, said an indication of the Fed's expanding its balance sheet would likely boost investor confidence in stocks and the industrial metals.
"This would likely prove negative for gold, short term. However, the longer-term inflationary implications will no doubt increase demand for gold as investors diversify into more tangible assets," Moore said.
As investors awaited key economic news out the U.S., Indian gold shoppers remained sidelined for another day as near-record prices "offered nothing in the way of incentives to lure them out to local dealers during the present festival period," Kitco analyst Jon Nadler wrote in a daily note.
Silver prices settled 16 cents lower at $20.64 per ounce while copper closed down 2 cents at $3.49 per pound.
Gold mining stocks, a risky but sometimes more profitable way to invest in gold, were trading in negative territory Tuesday. Kinross Gold (KGC) was falling 2.3% to $18.39 in morning trading, while Newmont Mining (NEM) was shedding 2% to $62.03.
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[BRIEFING.COM] The stock market finished a down week on a cautious note with small caps leading the retreat. The Russell 2000 lost 0.5%, widening its weekly decline to 2.6%, while the S&P 500 shed 0.3%. The benchmark index ended the week lower by 2.7%.
This morning, the market was provided a basis to rebound with the July employment report, which was just right for the policy doves (209K versus Briefing.com consensus 220K). It showed payroll growth that was weaker than expected, ... More
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