Gold News

Gold Drops 0.5% on Tuesday; Fed Decision on US Interest Rates Weighs on Financial Markets

From Chris Mullen at GoldSeek.com...

Gold Prices fell a few dollars in Asia on Tuesday and held near $784 in London before dropping as low as $778.95 early in New York trade.

The Gold Market then rallied back higher into the close and ended with a loss of just 0.53% for the session.

Silver dropped to as low as $14.10 in New York before it also rallied back higher in the last few hours of trade and ended over 1% off its low with a loss of 0.42%.

Gold Priced in Euros fell back under €542, platinum lost $16 to $1428, palladium lost $4 to $367, and copper fell over 3 cents to about $3.53.

Gold and silver mining equities fell roughly 2% at the open and remained near their lows into the close.

On the data front, US consumer confidence for Oct. fell precipitously from Sept., undercutting consensus forecasts with a reading of 95.9 vs. 99.5 expected. Wednesday at 08:30 EST brings third quarter GDP, expected to show 3.1% growth, plus the Chain Deflator (expected at 2.0%), and the Employment Cost Index expected at 0.9%.

The Chicago PMI for October is then due, expected at 53.0, with Construction Spending for Sept. at 10:00 EST. At 14:15 comes the highly anticipated Federal Reserve policy statement, widely forecast – and expected by the bond market - to announce a 25-basis point cut in the cost of borrowing Dollars.

In Tuesday's broader market crude oil fell over 3% back near $90 as production came back online in Mexico and Goldman Sachs advised taking profits after the recent record run. Traders are now watching for Wednesday's inventory report, expected to show a strong build in supplies.

The US Dollar index and US Treasury bonds both ended slightly lower but near unchanged as traders waited for Wednesday’s Fed announcement. The Dow, Nasdaq, and S&P traded mostly slightly lower on uncertainty about whether the Fed will in fact cut rates are expected.

"It is the investment aspect of gold that is driving the Gold Price to new heights as the Dollar, oil and uncertainty and trepidation turn even large professional funds to gold for part of their portfolios, even if only to counter the Dollar's moves," says Julian D.W. Phillips of the GoldForecaster.com.

"Gold is now being driven by factors outside the market, so it can break through its previous heights."

To Buy Gold Online Now on $3 spreads – with dealing costs up to one-tenth or less the cost of Buying Gold coins in the US today – be sure to visit BullionVault here...

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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