Gold Ends Lower Ahead Of Fed Minutes

(RTTNews) - Gold futures ended lower on Wednesday, ahead of the minutes from the Federal Reserve's October policy meeting and on reports of waning interest in the upcoming Swiss referendum to hike the country's gold reserves to 20 percent.

News reports that the referendum in Switzerland to hike the country's gold reserves to 20 percent may not find the necessary 50 percent majority support has also impacted the precious metal. Some opinion polls suggest the referendum scheduled for November 30 would likely fall short of a 50 percent majority support required to enforce it.

With unemployment rate having improved to 5.8 percent, better than the Fed's 6 percent target, markets will be looking for cues about how fiercely the Fed debated its "considerable time" pledge. Investors also continued to speculate whether the criteria for hiking interest rates has changed since then, from the minutes of the Federal Open Market Committee meet due later today.

While announcing the decision to end its monthly asset buying program at the meeting, the Fed had said that interest rates will remain at historic lows for "considerable time." Subsequent speeches by various Fed officials have not yielded a wide variety of opinions on the timing of rate hikes. The Fed minutes are due at 2 pm ET.

Fairly steady global equity markets and the dollar's recovery against some major currencies also have put a cap on the recent rally.

Gold for December delivery, the most actively traded contract, shed $3.20 or 0.3 percent to settle at $1,193.90 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday.

Gold for December delivery scaled an intraday high of $1,201.70 and a low of $1,173.90 an ounce.

On Tuesday, gold futures ended up $13.60 or 1.2 percent at $1,197.10 after rising to a near three-week high of $1,204.10 an ounce, with the dollar trending lower against some major currencies after the Japanese economy slipped into recession.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 723.01 tons on Wednesday from its previous close of 720.62 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 87.63 on Wednesday, up from its previous close of 87.61 late Tuesday in North American trade. The dollar scaled a high of 87.78 intraday and a low of 87.49.

The euro trended higher against the dollar at $1.2549 on Wednesday, as compared to its previous close of $1.2535 late Tuesday in North American trade. The euro scaled a high of $1.2570 intraday and a low of $1.2512.

In economic news, a report from the Commerce Department on Wednesday showed U.S. housing starts to have declined in October, with new construction of multi-family homes pulling back rather sharply. Housing starts fell 2.8 percent to a seasonally adjusted annual rate of 1.009 million in October from the revised September estimate of 1.038 million. Economists expected housing starts to climb to an annual rate of 1.025 million from the 1.017 million originally reported for the previous month.

The report also said building permits, an indicator of future housing demand, jumped 4.8 percent to an annual rate of 1.080 million in October from the revised September rate of 1.031 million. Building permits had been expected to climb to 1.040 million from the 1.018 million originally reported for the previous month.

Bank of England policymakers decided to leave its key rate at a historic low of 0.50 percent in a split vote for the fourth straight time at the meeting held on November 5 and 6, the minutes showed Wednesday.

In economic news from eurozone, data from the European Central Bank showed eurozone current account surplus to have increased to a seasonally adjusted Euro 30 billion in September, from Euro 22.8 billion in the preceding month.

From Asia, the Bank of Japan maintained its massive monetary stimulus a day after Prime Minister Shinzo Abe called for an early election and put off a proposed sales tax hike. The Policy Board of the central bank on Wednesday voted 8-1 to maintain the annual pace of increase in the monetary base at about JPY 80 trillion as they wait to see the effect of surprise expansion decision taken late last month.

Meanwhile, the leading index for Japan was unrevised in September, rising to 105.6 in September from 104.4 in August, final figures from the Cabinet Office showed Wednesday. This was unchanged from the preliminary estimate, and was the highest reading since April.