Gold prices dropped on Wednesday as the dollar extended its uptick ahead of the Federal Reserve’s monetary policy announcement.
The U.S. central bank is widely expected to leave interest rates unchanged. The focus is on the accompanying statement for clues about the outlook for rates.
At the press conference following the rate decision, Chair Jerome Powell may reiterate that the Fed is ‘proceeding carefully’ and another rate hike is still an option based on incoming data.
CME Group’s FedWatch Tool is currently indicating a 98.8% chance the Fed will leave rates unchanged today and a 74.6% chance rates will remain unchanged in December.
The dollar index advanced to 107.09, gaining nearly 0.4%.
Gold futures for December ended lower by $6.80 at $1,987.50 an ounce.
Silver futures for December ended down $0.162 at $22.790 an ounce, while Copper futures for December settled at $3.6490, the previous closing level.
In economic news, payroll processor ADP released a report before the start of trading showing private sector employment in the U.S. increased by less than expected in the month of October.
The report said private sector employment climbed by 113,000 jobs in October after rising by 89,000 jobs in September. Economists had expected employment to jump by 150,000 jobs.
A separate report released by the Institute for Supply Management showed manufacturing activity in the U.S. unexpectedly contracted at a faster rate in the month of October.
The ISM said its manufacturing PMI fell to 46.7 in October from 49.0 in September, with a reading below 50 indicating a contraction. Economists had expected the index to come in unchanged compared to the previous month.
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