MW: Gold falls as dollar strengthens ahead of Fed announcement
NEW YORK (MarketWatch) -- Gold futures edged lower Wednesday, as the U.S. dollar rebounded from a one-year low against the euro ahead of the Federal Reserve's announcement on monetary policy later in the afternoon.
Gold for December delivery, the most active contract, slid $3.90, or 0.4%, to $1,011.60 an ounce on the Comex division of the New York Mercantile Exchange. The thinly traded September contract was last down $3.70, or 0.4%, at $1,010.50. Both contracts were trading higher earlier in the session.
The September contract rose to $1,019.80 last Wednesday, an all-time high for a nearby Comex gold contract, while the December contract topped $1,020 an ounce.
Gold was "closely tracking the dollar's own close orbit," said Jon Nadler, senior analyst at Kitco Metals Inc. "Today's FOMC meeting could make a difference, but not necessarily mark a turning point."
A statement from the Federal Open Market Committee, the Fed's policy arm, is expected around 2:15 pm Eastern time. Officials will do their level best to stay out of the limelight out of fear that any steps they might take could be construed as tightening policy, analysts said. See The Fed.
Markets have now begun to wonder when the FOMC will begin to tighten monetary policy to remove the extra stimulus needed when the economy was so weak. Signs of tightening could boost the U.S. dollar and reduce gold's appeal as a hedge against a weak currency.
"Further weakness in the greenback could see the metal breach last week's high," said James Moore, an analyst at TheBullionDesk.com, in a note. But "gold is vulnerable to a test back to $985 to $990 should the dollar bounce."
In currencies trading Wednesday, the dollar rose against the euro after hitting a fresh one-year low in the previous session. The dollar index (DXY 76.19, +0.07, +0.09%) was slightly higher at 76.191. See Currencies.
Holdings in the SPDR Gold Trust (GLD 98.90, -0.77, -0.77%) , the biggest gold exchange-traded fund, stood at a two-month high of 1,101.73 metric tons Tuesday, unchanged from a day ago.
In other metals, December silver fell 15 cents, or 0.9%, to $16.965 an ounce and October platinum futures declined $10.10, or 0.8%, to $1,329.10 an ounce. December palladium lost $2.30, or 0.8%, to $300.10 an ounce.
December copper dropped 8.35 cents, or 2.9%, to $2.781 a pound.
