Gold Ends Higher, But Stays Below $1,200

(RTTNews) - Gold futures snapped a five-day loss to end a tad higher on Wednesday, after having fallen sharply in the previous session amid renewed doubts to whether the Federal Reserve will signal tighter monetary policy later this afternoon.

Nevertheless, the gains were very limited as the dollar strengthened against a basket of major currencies.

Once a foregone conclusion the Fed would remove its "considerable time" pledge from this month's monetary policy statement, now analysts are not sure if that is appropriate, given the economic headwinds outside the U.S.

The Fed is scheduled to make its policy announcement later this afternoon.

Meanwhile, analysts believe Russia may be gearing up to sell its gold reserves as it handles a currency crisis that has seen its ruble drop to record lows against the dollar.

Gold for February delivery, the most actively traded contract, inched up $0.20 percent to settle at $1,194.50 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday.

Gold for February delivery scaled an intraday high of $1,203.10 and a low of $1,190.80 an ounce.

On Tuesday, gold futures ended at $1,194.30 an ounce, down $13.40 or 1.1 percent, tracking rising global equity markets with investors focused on the U.S. Federal Reserve's monetary policy outcome on Wednesday.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged down to 721.56 tons on Wednesday, from its previous close of 723.36 tons on Tuesday.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 88.55 on Wednesday, up from its previous close of 87.97 late Tuesday in North American trade. The dollar scaled a high of 88.65 intraday and a low of 87.90.

The euro trended lower against the dollar at $1.2428 on Wednesday, as compared to its previous close of $1.2511 late Tuesday in North American trade. The euro scaled a high of $1.2518 intraday and a low of $1.2383.

In economic news from the U.S., a Labor Department report showed consumer price index to have dropped by 0.3 percent in November, after coming in unchanged in October. Economists expected the index to edge down by 0.1 percent.

In economic news from eurozone, inflation came in line with flash estimate in November at a five-year low, final data from Eurostat showed. Annual inflation came in at 0.3 percent in November, down from 0.4 percent in October. A year ago, the rate was at 0.9 percent. The November inflation matched flash estimate released on November 28.

From Europe, the unemployment rate in U.K. eased to a 6-year low in the three months to October and earnings growth exceeded inflation, boosting scope for strong private spending in coming months. The jobless rate dropped to 6 percent during August to October from 6.2 percent seen in the May to July period, the Office for National Statistics reported Wednesday. Economists had forecast a rate of 5.9 percent. This was the lowest since late 2008.

Meanwhile, Bank of England policymakers decided to leave its key interest rate at a historic low of 0.50 percent in a split vote for the fifth straight time at the meeting held on December 3 and 4. The central bank also unanimously decided to maintain its asset purchase program at GBP 375 billion.

The Asian Development Bank downgraded its growth outlook for Developing Asia as momentum slowed in the second half of 2014, the Manila-based Asian Development Bank said Wednesday. The bank said the region will grow 6.1 percent in 2014 instead of 6.2 percent estimated in September.

The ADB revised China's growth forecast down to 7.4 percent in 2014 from 7.5 percent, and to 7.2 percent from 7.4 percent for 2015. For India, the bank maintained a 5.5 percent growth outlook for FY2014, while indicating the government should extend efforts to reach the 6.3 percent growth estimate in FY2015.