Gold prices fell on Tuesday as the dollar climbed higher ahead of the Federal Reserve’s monetary policy announcement, due on Wednesday.
The Fed is widely expected to leave interest rates unchanged. Traders will pay close attention to the accompanying statement for clues about the outlook for rates.
CME Group’s FedWatch Tool is currently indicating a 97.1% chance the Fed will leave rates unchanged on Wednesday and a 68.9% chance rates will remain unchanged in December.
“The Fed is still wary of letting their guard down too early after missing their inflation target badly in the last few years,” said Bill Adams, Chief Economist for Comerica Bank.
The dollar index, which dropped to 105.91 in the European session, climbed to 106.86 later on in the day, and was last seen at 106.71, up 0.56% from the previous close.
Gold futures for December ended lower by $11.30 at $1,994.30 an ounce.
Silver futures for December ended down $0.444 at $22.952 an ounce, while Copper futures for December settled at $3.6490 per pound, down $0.0095 from the previous close.
On the economic front, data from the Labor Department showed the employment cost index shot up by 1.1% in the third quarter, compared to economist estimates for a 1% advance.
However, the report also showed the annual rate of growth by the employment cost index slowed to 4.3% in the third quarter from 4.5% in the second quarter.
The Bank of Japan today tweaked its bond yield control policy, loosening its grip on long-term yields that have been trending upward.
The Bank of England is scheduled to announce its monetary policy on Thursday.
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