18.08.2015 20:00:10

Gold Ends Lower Ahead Of Fed Policy Meet Outcome

(RTTNews) - Gold futures ended lower on Tuesday, ahead of the two-day Federal Open Market Committee's July outcome meet scheduled for Wednesday, even as the dollar trended higher against a basket of major currencies.

The release of the minutes from the July Federal Reserve meeting could shed light on when the Fed intends to raise interest rates. However, the general view is that the Fed's plan for an interest rate hike may have been ruined with China surprisingly devalued the yuan last week.

With markets betting the Fed may delay the rate hike until December, investors were hesitant to take a position. Although the Federal Reserve Chief Janet Yellen had earlier indicated a rate hike in the offing this year if the economy shows signs of improvement, there has been only speculation if it will happen in September.

In economic news, a Commerce Department report on Tuesday showed housing starts in the U.S. to have inched up to a nearly eight-year high in July, but also indicated a sharp drop in building permits.

Gold for December delivery, the most actively traded contract, dropped $1.50 or 0.1 percent, to settle at $1,116.90 an ounce, on the Comex division of the New York Mercantile Exchange on Tuesday.

Gold for December delivery scaled an intraday high of $1,120.40 and a low of $1,108.50 an ounce.

On Monday, gold prices for December delivery gained $5.70 or 0.5 percent, to settle at $1,118.40 an ounce, even as the dollar trended higher amid concerns over China's move to devalue the yuan, and on some mixed economic data from the U.S.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 671.87 tons on Tuesday, from its previous close.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 97.02 on Tuesday, up from its previous close of 96.82 in late North American trade on Monday. The dollar scaled a high of 97.07 intraday and a low of 96.68.

The euro trended lower against the dollar at $1.1028 on Tuesday, as compared to its previous close of $1.1078 in North American trade late Monday. The euro scaled a high of $1.1095 intraday and a low of $1.1020.

In economic news, a Commerce Department report showed housing starts in the U.S. inched up by 0.2 percent to an annual rate of 1.206 million in July from the revised June estimate of 1.204 million. Economists expected housing starts to climb to a rate of 1.180 million from the 1.174 million originally reported for the previous month.

Meanwhile, the report said building permits, an indicator of future housing demand, plunged 16.3 percent to an annual rate of 1.119 million in July after jumping to an eight-year high of 1.337 million in June. Building permits had been expected to pull back to a rate of 1.230 million from the 1.343 million originally reported for the previous month, reflecting an 8.4 percent decrease.

From Europe, the number of persons in employment in Germany increased further in the second quarter, but at a slower pace, preliminary figures from Destatis showed Tuesday. Total number of employed persons in the country rose 0.4 percent, or by 175,700 persons, to 42.8 million in the second quarter from the corresponding period last year. This was lower than the 0.6 percent hike logged in the first quarter.

U.K. consumer prices rose unexpectedly in July on smaller discounts on clothing prices during summer sales, while core inflation reached a five-month high, the Office for National Statistics revealed Tuesday. Consumer prices advanced 0.1 percent in July from last year, while they were expected to remain flat as seen in June.

House price inflation in the United Kingdom accelerated marginally in June, after remaining stable in the previous month, figures from the Office for National Statistics showed Tuesday. Average house prices rose 5.7 percent year-over-year in June, following a 5.6 percent increase in May, revised down from the 5.7 percent hike estimated earlier.

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