Gold futures ended lower on Tuesday, as investors weighed a slew of economic data ahead of the outcome of the Federal Reserve’s two-day Federal Open Market Committee meet on Wednesday.
The Fed will announce Thursday afternoon whether it will raise interest rates for the first time in about ten years. Rates have been at effectively zero since the financial market meltdown of 2008.
A rate hike is likely to drive gold prices lower, as the precious metal will lose much of its appeal as a hedge against inflation. On the other hand, prices may be supported by gold’s safe haven value.
A Commerce Department report on Tuesday showed a modest uptick in sales in August, after reporting a notable increase in U.S. sales in the previous month.
Industrial production in the U.S. pulled back more than expected in August, a report released from the Federal Reserve said Tuesday.
Business activity for New York manufacturers has continued to contract in September, a report from the Federal Reserve Bank of New York showed Tuesday.
Gold for December delivery, the most actively traded contract, dropped $5.10 or 0.5 percent, to settle at $1,102.60 an ounce, on the Comex division of the New York Mercantile Exchange on Tuesday.
Gold for December delivery scaled an intraday high of $1, 108.50 and a low of $1,101.50 an ounce.
On Monday, gold prices for December delivery gained $4.40 or 0.4 percent, to settle at $1,107.70 an ounce, as investors await the decision of the Federal Reserve on interest rate hikes, with speculation rife of an immediate hike by the Fed at the conclusion of its policy meet.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, remained unchanged at 678.18 tons from its previous close of 672.18 tons.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 95.62 on Tuesday, up from its previous close of 95.27 in late North American trade on Monday. The dollar scaled a high of 95.68 intraday and a low of 95.13.
The euro trended lower against the dollar at 1.1270 on Tuesday, as compared to its previous close of 1.1317 in North American trade late Monday. The euro scaled a high of 1.1331 intraday and a low of 1.1260.
On the economic front, U.S. retail sales in August edged up by 0.2 percent following an upwardly revised 0.7 percent increase in July. Economists expected retail sales to rise by 0.3 percent compared to the 0.6 percent growth originally reported for the previous month.
Industrial production in the U.S. fell 0.4 percent in August following an upwardly revised 0.9 percent increase in July. Economists expected production to dip by 0.2 percent compared to the 0.6 percent growth originally reported for the previous month.
The New York Fed’s general business conditions index inched up to a negative 14.7 in September from a negative 14.9 in August. A negative reading indicates contraction in manufacturing activity. Economists expected the general business conditions index to show a more substantial improvement to a reading of negative 0.5.
A Commerce Department report on Tuesday showed a modest uptick in total business inventories in July, with increase in retail inventories partly offset by decreases in manufacturing and wholesale inventories,
Business inventories inched up 0.1 percent in July, following a downwardly revised 0.7 percent increase in June. The increase was in line with economist estimates.
Eurozone trade surplus grew for a second straight month in July and exceeded economists’ expectations, figures from the Eurostat showed Tuesday. The seasonally adjusted trade balance rose to EUR 22.4 billion from EUR 21.9 billion in June. Economists had forecast a lower figure of EUR 21.4 billion. The latest surplus was the biggest in more than a year.
Employment growth in Eurozone accelerated marginally for the second straight quarter in the three months ended June, figures from Eurostat showed Tuesday. Employment rose a seasonally adjusted 0.3 percent in the second quarter, following a 0.2 percent climb in the previous quarter. In the fourth quarter last year, employment edged up 0.1 percent.
German economic confidence weakened for the sixth consecutive month in September to its lowest level in 10 months, survey data from the Mannheim-based Centre for European Economic Research or ZEW showed Tuesday.
The investor confidence index dropped to 12.1 points in September from 25 in August. The latest reading was the lowest since November 2014, when it was 11.5, and was below the expected score of 18.3.
France’s EU measure of inflation slowed in August even as prices rebounded after declining in July, preliminary figures from the statistical office INSEE showed Tuesday. The harmonized index of consumer prices edged up 0.1 percent year-on-year. Economists had expected the measure to climb at July’s 0.2 percent pace.
U.K. inflation returned to zero in August, as expected, on a renewed decline in oil prices, and factory gate prices continued its downward trend, casting doubt about the ability of the Bank of England to achieve the inflation target.
Consumer prices remained unchanged in August from a year ago, following a 0.1 percent rise in July, data released by the Office for National Statistics showed Tuesday. The slowdown was caused by a fall in fuel prices and slower growth in clothing costs.
UK house price inflation slowed sharply in July to its weakest level in nearly two years, figures from the Office for National Statistics showed Tuesday.
The house price index rose 5.2 percent year-on-year after a 5.7 percent increase in June. In April and May, house price inflation was 5.6 percent. The latest figure was the lowest since September 2013, when house prices rose 3.8 percent.
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