Gold eases on stronger dollar after Fed statement

By Clara Denina

LONDON (Reuters) - Gold slipped to one-week lows on Thursday as the dollar gained after the U.S. Federal Reserve's latest policy outlook was deemed less dovish than some had wagered on.

The metal had gained ground over the past two weeks, hitting a five-week high on Tuesday in anticipation of the Fed's decision.

But it fell after the U.S. central bank did not sound quite as alarmed about the state of the economy as some had anticipated, although it kept its $85 billion-a-month stimulus plan intact.

"The market was expecting that in light of the government shutdown and weaker data there was going to be a supportive statement, perhaps more dovish than it has been in recent months, but it didn't move in that direction," Macquarie analyst Matthew Turner said.

Spot gold was down 0.5 percent at $1,335.36 an ounce by 1102 GMT, after falling to its lowest since October 24 at $1,330.16.

Comex gold futures slipped 1 percent to a one-week low of $1,330, while silver dropped nearly 3 percent.

The dollar hovered near a two-week high and U.S. Treasury yields stood above 2.5 percent.

Gold prices have fallen nearly 20 percent this year in the expectation of an imminent scaling back of monetary stimulus by the Fed, but a budget battle in Washington and a string of weak economic data had raised questions over whether it would begin that process this year, giving bullion a boost.

"With this event risk now behind us, the market will go back into data-watch mode," said ANZ analyst Victor Thianpiriya. "For gold, the intraday moves will continue to be driven by gyrations in the U.S. dollar."

The market will monitor U.S. weekly jobless claims at 1230 GMT and Chicago PMI numbers for October at 1345 GMT.

Bullion was also undermined by slow physical buying in Asia, especially China.

Prices on the Shanghai Gold Exchange have trended lower than global prices due to fears of a cash crunch.

Net purchases by the Chinese from Hong Kong, however, totalled 110.914 tonnes in September, compared with 110.505 tonnes in August, according to data from the Hong Kong Census and Statistics Department.

Spot silver was down 1.3 percent to $22.32 an ounce, well below its highest since September 20 at $23.06 hit in the previous session.

Spot platinum fell 0.8 percent at $1,458.90 an ounce. Spot palladium lost 0.3 percent at $740.72 an ounce.

(Additional reporting by A. Ananthalakshmi in Singapore; editing by Jason Neely)

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Gold edges up as investors await Fed stimulus statement

By Clara Denina

LONDON (Reuters) - Gold edged higher on Wednesday as investors bet the U.S. Federal Reserve would signal plans later in the day to keep its stimulus intact for several more months.

The Federal Open Market Committee (FOMC) is widely expected to keep its massive bond-buying programme unchanged when it announces its decision at 1800 GMT and to signal that it is unlikely to begin scaling back the stimulus programme until 2014.

"My feeling is that the overall tone (of the Fed statement) will be somewhat dovish, it will acknowledge the uncertainty generated by the government shutdown and weak data and will emphasise a cautious response going forward," Mitsubishi analyst Jonathan Butler said.

"All those things should be supportive of gold but I think they could be by then priced in and we may see some choppy trading around the time of the announcement."

Spot gold rose 0.4 percent to $1,349.14 an ounce at 1112 GMT. The metal hit a five-week high of $1,361.60 on Monday, before retreating. A break above 2013 resistance line of $1,359.52 will confirm that another up leg is being made, Commerzbank technical analysts said.

U.S. gold futures for December delivery rose by $4.00 an ounce to $1,349.40.

Gold prices slipped 0.6 percent on Tuesday, the biggest daily drop in a week, as traders took profits after the dollar slightly strengthened, confirming analysts' view that a delay to Fed tapering, probably until at least March, has been already priced into markets.

The dollar was little changed against a basket of currencies, while U.S. Treasury yields fell below 2.5 percent.

Returns from U.S. bonds are closely watched by the gold market because the metal pays no interest, and a fall in returns is seen as positive for the metal.

MORE DATA WATCHING

Gold has gained about 7 percent from a three-month low hit on October 15 after weak U.S. data and the repercussions of budget battles in Washington raised hopes the Fed would delay the winding-down of its $85 billion monthly bond purchases well into early 2014.

As the market continues to be sensitive to U.S. data, investors will monitor a report on private sector jobs growth in the United States for October due out later, which could add weight to the view that this month's political showdown in Washington has caused a setback in the nascent recovery.

Chinese gold prices recovered slightly on Wednesday after ending at a discount to global prices in the previous session for the first time this year. Fears of a credit tightening had prompted Chinese investors to sell bullion for cash.

"If this trend were to continue for any length of time, this could also lead to weaker Chinese gold imports," Commerzbank said.

Indian premiums stayed near record highs due to a supply crunch.

Spot silver rose 0.8 percent to $22.69 an ounce.

Spot platinum was up 0.6 percent at $1,466.24 an ounce, having risen to an high of $1,471.50 earlier on prospects that strikes in South Africa could curb supply. Spot palladium gained 0.2 percent at $745.50 an ounce.

(Additional reporting by A. Ananthalakshmi in Singapore; editing by Jane Baird)

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Wall St dips before Fed policy statement on stimulus

By Chuck Mikolajczak

NEW YORK (Reuters) - U.S. stocks edged lower on Wednesday, following a string of four sessions of gains and before the release of the Federal Reserve's statement on the economy and its ultra-loose money policy.

The U.S. central bank, which will announce its decision at 2:00 p.m. (1800 GMT), is expected to keep intact its program of buying $85 billion of Treasuries and mortgage securities a month. It may indicate that its aggressive stimulus policy, which is aimed at invigorating the economy, will be extended into 2014. Several key economic indicators have shown weakness.

Many analysts expect a delay until at least March in easing the stimulus measures, which have encouraged investors to buy riskier assets, like stocks. The Dow and S&P 500 index climbed to record highs on Tuesday, the latest in a series of all-time highs.

"It's wait to see what the Fed has to say. I don't think anybody expects any surprise coming out of the Federal Reserve's meeting," said Hugh Johnson, chief investment officer of Hugh Johnson Advisors LLC in Albany, New York.

"Everybody is just stepping back to make sure."

The central bank has held interest rates near zero since late 2008 and has quadrupled the size of its balance sheet to more than $3.7 trillion through three rounds of bond buying. The purchases have made a major contribution to the S&P 500's gain of nearly 24 percent this year.

Data on Wednesday showed private-sector employers hired the fewest workers in six months in October while the consumer price index showed benign inflation, both arguments supporting the Fed's stimulus policy.

The Dow Jones industrial average fell 21.33 points or 0.14 percent, to 15,659.02, the S&P 500 lost 3.92 points or 0.22 percent, to 1,768.03 and the Nasdaq Composite dropped 10.971 points or 0.28 percent, to 3,941.367.

In the latest batch of corporate earnings, shares of General Motors Co rose 3 percent to $37.14 after the No. 1 U.S. automaker reported stronger-than-expected quarterly profit due to strength in its core North American market and a smaller-than-anticipated loss in Europe.

Shares of Yelp Inc dropped 5.6 percent to $64.99 a day after the business-search service firm reported a wider third-quarter loss.

Western Union shares slumped 12.3 percent to $16.88 after the world's largest money-transfer company reported a 20 percent drop in third-quarter profit, hurt by lower revenue from its consumer business and higher expenses.

Companies expected to report earnings after the close on Wednesday include Visa , Starbucks , MetLife and Kraft .

According to Thomson Reuters data, of the 313 companies in the S&P 500 that have reported earnings through Wednesday morning, 68.4 percent have topped Wall Street expectations, above both the 63 percent beat rate since 1994 and the 66 percent rate for the past four quarters.

Revenue's performance has been mixed, however, with 53.7 percent of S&P 500 companies beating expectations, well below the 61 percent average since 2002 but slightly above the 49 percent rate for the last four quarters.

(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)

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Gold falls on dollar rise, awaits Fed statement

By Frank Tang and Clara Denina

NEW YORK/LONDON (Reuters) - Gold fell on Tuesday, retreating from the previous session's five-week high, as a dollar rise and encouraging U.S. consumer spending data prompted investors to take profits ahead of a policy decision by the U.S. Federal Reserve.

Bullion prices slipped after a gauge of U.S. consumer spending rose in September, but falling car sales pointed to sluggish economic growth.

The Fed began a two-day policy meeting in which it is widely expected to confirm it will continue buying bonds at the rate of $85 billion a month in a policy statement on Wednesday.

"Investors are keen to see what the Fed will say with regard to the softening seen in some of the recent U.S macro data and whether this will impact the central bank's tapering timeline," said Edward Meir, metals analyst at futures brokerage INTL FCStone.

Many economists say the Fed could push tapering to March next year.

Spot gold was down 0.5 percent to $1,344.89 an ounce by 2:40 p.m. EDT (1840 GMT).

It hit its highest since September 20 at $1,361.60 on Monday, as disappointing U.S. manufacturing and pending home sales data reinforced the view the economy is not yet strong enough for the Fed to start tapering stimulus.

U.S. gold futures for December delivery settled down $6.70 an ounce at $1,345.50, with volume about 15 percent below its 30-day average, preliminary Reuters data showed.

Gold prices have fallen nearly 20 percent this year in the expectation of imminent tapering by the Fed.

The metal has gained 8 percent over the past two weeks, as a budget battle in Washington and a string of weak economic data have raised questions over whether it will scale back monetary stimulus, giving bullion a boost.

ASIAN DEMAND WEAK

Physical demand could take a hit on signs of slower buying by Asian investors and jewelers.

Chinese gold prices closed lower than global prices on Tuesday for the first time this year, traders said, as fears of a credit tightening prompted investors to sell bullion for cash.

As a gauge of investor interest, holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Shares, remained unchanged at 872.02 tonnes on Monday after falling 4.5 tonnes on Friday.

Among other precious metals, silver eased 10 cents to $22.46 an ounce. Platinum was down 1.1 percent to $1,454.50 an ounce, while palladium eased 0.1 percent to $742.72.

(Additional reporting by A. Ananthalakshmi in Singapore; Editing by James Jukwey and Marguerita Choy)

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Asian markets seen cautiously firmer ahead of Fed statement

By Wayne Cole

SYDNEY (Reuters) - Asian share markets should take heart from record highs in U.S. stocks on Wednesday as investors wager the Federal Reserve will rock no boats at its policy meeting and leave stimulus in place for the next few months at least.

Australia was the first market to dip its toe in the water, gaining 0.5 percent, while MSCI's index of Asia-Pacific shares outside Japan was a shade firmer.

A mixed bag of U.S. economic data caused few frowns since it merely reinforced expectations the central bank will maintain to the status quo when its two-day policy meeting ends on Wednesday.

Even the U.S. dollar got a lift as dealers gauged the prospect of easy money for longer had now been pretty much discounted following two months of losses.

Markets seem to be operating on the assumption that the Fed's policy statement will not challenge the growing consensus that any tapering of its $85 billion of monthly asset purchases will not start until March at the earliest.

Such an outcome would be taken as justifying the rallies in stocks and bonds seen in recent weeks and might have only a limited impact on prices in the near term.

But it also means markets are vulnerable to a surprise.

"With expectations of taper firmly kicked into 2014 the risk that the FOMC could decide to move earlier looks asymmetrical," said Patrick Perret-Greene, an analyst at Australia and New Zealand Bank.

"If the Fed does nothing tomorrow then nothing really happens but if they do something or even hint at moves in the not too distant future the effects could be dramatic."

The Fed's decision is due at 1800 GMT, though divining its true message may be tricky as no new economic forecasts are released and nor will Chairman Ben Bernanke be giving a news conference.

BE BORING, PLEASE

For now, markets are hoping the Fed will be boring.

The Dow Jones industrial average ended Tuesday 0.72 percent higher at an all-time closing peak of 15,680.35.

The S&P 500 gained 0.56 percent aided further by a jump in heavyweight IBM after the company's board of directors approved another $15 billion for stock buy-backs.

Among the U.S. data, a measure of core retail sales showed surprising resilience in September, yet a grim survey of consumers highlighted the heavy toll the government shutdown had taken on the public mood.

MSCI's world equity index rose 0.25 percent On Tuesday, but remained within last week's trading range.

Having fallen steadily since the last Fed meeting, the U.S. dollar seems to have reached a bottom in the last few days.

The dollar index reached a one-week peak of 79.618, having climbed 0.5 percent on Tuesday. Just last Friday, it had plumbed a nine-month low at 78.998.

"Fed meetings have not been friendly to the USD this year, with the dollar weakening following every meeting in 2013 with the exception of June," analysts at BNP Paribas wrote in a client note.

"However, with markets already having adjusted to a much more dovish view on the Fed outlook, we think the USD is likely to hold up better this time."

The euro slipped to $1.3746, pulling further away from a 23-month peak of $1.3833 set just a few days ago.

Yields on the benchmark 10-year Treasury note were at 2.505 percent after dipping from a high of 2.5360 on Tuesday. The market has enjoyed a substantial rally in the past two months with yields falling all the way from 3 percent.

Spot gold edged back to $1,343.64 an ounce as the dollar gained, but is still up more than 7 percent from a three-month low hit mid-October.

U.S. crude oil was off 67 cents at $97.53 a barrel.. Traders termed this a consolidation after a sharp gain on Monday when reports of a sharp drop in Libyan oil exports rekindled worries over global supply.

(Editing by Eric Meijer)

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