Gold Ends Lower With Focus On Fed QE Taper

(RTTNews) - Gold futures snapped a two-day gain to end lower Tuesday, on some upbeat economic data out of the U.S., even as investors anxiously await the outcome of the two-day U.S. Federal Reserve policy review meet. With the Fed likely to begin tapering its quantitative easing program, speculations now hinge on the timing and the quantum of cut that would be made.

Gold for February delivery, the most actively traded contract, dropped $14.30 or 1.2 percent to close at $1,230.10 an ounce Tuesday on the Comex division of the New York Mercantile Exchange.

Gold for February delivery scaled an intraday high of $1,247.60 and a low of $1,226.50 an ounce.

Yesterday, gold settled higher mainly on a short covering rally even as investors await cues of a possible taper down by the U.S. Federal Reserve of its quantitative easing program at the two-day policy review meet beginning Tuesday. Gold prices also found support with the dollar trading lower against a basket of major currencies.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, moved down to 818.90 tons form 827.60 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.03 on Tuesday, down from 80.11 late Monday in North American trade. The dollar scaled a high of 80.28 intraday and a low of 79.98.

The euro traded higher against the dollar at $1.3771 on Tuesday, as compared to its previous close of $1.3761 late Monday in North America. The euro scaled a high of $1.3782 intraday and a low of $1.3724.

In economic news from the U.S., the Labor Department said its consumer price index was unchanged in November after edging down by 0.1 percent in October. The flat reading for the index came in line with economist estimates. Meanwhile, the core consumer price index, which excludes food and energy prices, rose by 0.2 percent in November following a 0.1 percent uptick in the previous month. Economists had expected core prices to inch up by another 0.1 percent.

U.S. homebuilder confidence improved much more than anticipated in December, an encouraging sign for the housing market going into 2014, a report from the National Association of Home Builders showed Tuesday. The NAHB/Wells Fargo Housing Market Index climbed to 58 in December from 54 in November. Economists expected the index to edge up to 55. With the bigger than expected increase, the index reached its highest level since a matching reading in August, which represented a near eight-year high.

Elsewhere, eurozone inflation rose to 0.9 percent in November from 0.7 percent a month ago, Eurostat reported. The rate matched the flash estimate published on November 29. The statistical office revised core inflation down to 0.9 percent from 1 percent. The rate was slightly above October's 0.8 percent. Month-on-month, consumer prices slipped 0.1 percent in November.

Meanwhile, U.K. inflation slowed to 2.1 percent in November from 2.2 percent in October, the Office for National Statistics showed. The rate was forecast to remain at 2.2 percent in November. Inflation is now slightly above the 2 percent target.

Germany's economic confidence increased to the highest level in nearly seven years in December, and also to a larger extent than expected by economists, latest data showed. The ZEW indicator of Economic Sentiment climbed to 62 in December from 54.6 in November, results of a survey conducted by the Centre for European Economic Research/ZEW revealed. Economists expected a slower increase to 55.