Gold Prices Slip as Investors Eye Fed’s Policy Rate Statement; Silver Prices Also Slip

Gold prices fell on Tuesday as the U.S. dollar gained traction amid speculation that the Federal Reserve, which is due to announce its policy rate statement on Wednesday, might herald a possible scaling down of the bond purchase program, prompting investors to avoid taking fresh bets on inflation-hedge assets. Silver prices also edged lower in trading on Tuesday.

At last check, gold futures for August delivery were edging down 0.38% to $1,324.60 an ounce while spot gold was down 0.18% to $1,324.54 an ounce. In late trading, the SPDR Gold Trust (ETF) (NYSE: GLD) was down 0.27%.

Silver futures fell 0.93% to $19.68 an ounce.

A couple of reasonably solid economic data releases also supported the dollar. As commodities are dollar dominated in international markets, any strength in the U.S unit weighs on their demand.

U.S. home prices rose to its highest level in May since 2006, according to the S&P/ Case-Shiller Index. The consumer confidence index slipped slightly to 80.3 in July from 82.1 in June but the reading was not too far from economists’ forecast of 81.1.

The Fed’s two-day open market committee meeting (FOMC) will end on Wednesday after which the bank’s Chairman, Ben Bernanke will take questions during a press conference. Although it is widely anticipated that Bernanke will offer a dovish forward-looking guidance (lower interest rates for a prolonged period), there is little uncertainty as to when the bank might start tapering its economic stimulating measures.

Earlier in July, the Fed Chairman had said that the bank could start scaling down the asset purchases later this year; but, he also said that the bank will leave “all options open”.

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Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.