Gold drops ahead of Federal Reserve statement on policy
Published Jul 31, 2013 01:48PM ET
Better-than-expected growth rates out of the U.S. pushed down prices as well.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,311.05 during U.S. afternoon hours, down 1.04%.
The December contract settled down 0.36% at USD1,324.80 a troy ounce on Tuesday.
Gold futures were likely to find support at USD1,269.45 a troy ounce, the low from July 17, and resistance at USD1,340.15, last Friday's high.
Investors avoided gold to see if the Federal Reserve makes any indication in its statement later on when stimulus programs could taper and eventually end.
Stimulus programs such as the Fed's USD85 billion monthly asset-purchasing plan tend to weaken the dollar to spur recovery, making gold an attractive hedge, and talk of their dismantling can bruise the yellow metal.
Data released earlier suggested the U.S. economy is on the mend and won't need monetary support for much longer, which kept gold lower.
The Bureau of Economic Analysis reported earlier that the U.S. gross domestic product grew at an annual rate of 1.7% in the three months to June, shooting past expectations for a 1.0% reading
The report showed personal consumption grew 1.8% in the second quarter, above expectations for 1.6%. Consumer spending typically accounts for nearly 70% of U.S. economic growth.
Separately, payroll processing firm ADP said non-farm private employers created 200,000 jobs in July, above expectations for an increase of 180,000.
Data also showed that the Chicago purchasing managers' index rose less than expected in July, hitting 52.3 from 51.6 in June. Analysts had expected the index to rise to 54.0 for July.
Elsewhere on the Comex, silver for September delivery was down 0.52% at USD19.578 a troy ounce, while copper for September delivery was up 2.36% and trading at USD3.114 a pound.
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Written By: Investing.com
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