Gold Futures Settle Lower Ahead Of Fed Policy Announcement

Gold futures settled lower on Wednesday after moving in a very tight band below the unchanged line, as traders made cautious moves ahead of the Federal Reserve’s policy announcement.

With inflation at an elevated level, the Fed is widely expected to end its $120 billion a month bond buying program sooner than previously expected and bring forward the possible timing of rate hikes.

Reports suggest the Fed could double the rate it is reducing its asset purchases to $30 billion per month from the $15 billion per month announced at its previous meeting in November.

Traders looked ahead to the central bank’s policy announcement and the accompanying statement. Fed Chair Jerome Powell will brief the press at 2.30 PM ET.

A slightly higher dollar weighed on the yellow metal. The dollar index, which advanced to 96.68, eased a bit subsequently and was at 96.63, up 0.07% from the previous close.

Gold futures for February ended down by $7.80 or about 0.4% at $1,764.50 an ounce.

Silver futures for March closed lower by $0.379 at $21.545 an ounce, while Copper futures for March settled at $4.1825 per pound, down $0.0750 from the previous close.

Data released by the Commerce Department showed U.S. retail sales edged up by 0.3% in November after soaring by an upwardly revised 1.8% in October. Economists had expected retail sales to rise by 0.8% compared to the 1.7% spike originally reported for the previous month.

A report from the Labor Department showed U.S. import prices increased in line with economist estimates in the month of November, climbing by 0.7%, after surging by an upwardly revised 1.5% in October.

A report from the Federal Reserve Bank of New York showed an unexpected acceleration in the pace of growth in regional manufacturing activity in the month of December.

The New York Fed said its general business conditions index inched up to 31.9 in December from 30.9 in November, with a positive reading indicating growth. The uptick surprised economists, who had expected the index to pull back to 20.5.

The National Association of Home Builders released a report showing a modest improvement in U.S. homebuilder confidence in the month of December. The report said the NAHB/Wells Fargo Housing Market Index inched up to 84 in December from 83 in November, reaching its highest level since a matching reading in February.

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