Gold Ends Lower Ahead Of Fed Meet Outcome

(RTTNews) - Gold futures snapped a two-day gain to end lower on Wednesday, ahead of the crucial monetary policy decision from the Federal Reserve, even as rally in prices fizzled out with the dollar plummeting to monthly lows.

The Federal Reserve will conclude its 2-day policy meeting this afternoon and is widely expected to leave interest rates unchanged, with investors focused on any changes to the accompanying statement.

The U.S. Federal Reserve is expected to keep interest rates at zero yet again, but traders will be looking for clarity on when the Fed intends to finally hike rates. A summertime rate hike once seemed to be on the cards, but an economic lull and stubbornly low inflation could compel the Fed to hold off for a while.

Meanwhile, in some disappointing economic data, U.S. gross domestic product increased less than anticipated, rising just 0.2 percent in the first quarter following the 2.2 percent growth seen in the fourth quarter. Economic growth in country for the first three months of 2015 was expected to be weak due to the severe winter weather.

Gold for June delivery, the most actively traded contract, dipped $3.90 or 0.3 percent to settle at $1,210.00 an ounce, on the Comex division of the New York Mercantile Exchange on Wednesday.

Gold for June delivery scaled an intraday high of $1,213.50 and a low of $1,203.90 an ounce.

On Tuesday, gold futures gained $10.70 or 0.9 percent to settle at $1,213.90 an ounce, on a weak dollar and ahead of the U.S. Federal Reserve's two-day monetary policy meet, with focus on the Fed statement for some clarity to the imminent interest rate hike.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 739.06 tons from its previous close of 742.35 tons.

The dollar plunged against some major currencies on Wednesday, with investors skeptic of the the greenback ahead of the Fed's interest rate decision later today.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 94.84 on Wednesday, down from its previous close of 96.11 on Tuesday in late North American trade. The dollar scaled a high of 96.18 intraday and a low of 94.68.

The euro trended higher against the dollar at $1.1164 on Wednesday, as compared to its previous close of $1.0983 in North American trade late Tuesday. The euro scaled a high of $1.1189 intraday and a low of $1.0961.

On the economic front, a Commerce Department report on Wednesday showed U.S. gross domestic product to have increased less than anticipated, even as economic growth in the first three months of 2015 was expected to be weak due to the severe winter weather. U.S. GDP inched up by just 0.2 percent in the first quarter following the 2.2 percent growth seen in the fourth quarter. The modest uptick compared to economist estimates for an increase of about 1.0 percent.

The National Association of Realtors report on Wednesday showed pending home sales in the U.S. rose to its highest level in almost two years in March, with more home buyers than usual entering the competitive spring market. NAR's pending home sales index climbed 1.1 percent to 108.6 in March from an upwardly revised 107.4 in February. Economists expected the index to increase by about 1.0 percent.

Eurozone economic confidence weakened unexpectedly in April after the Greece crisis dampened activity, a closely watched survey showed Wednesday. Meanwhile, bank lending grew for the first time in three years in March. The economic sentiment index dropped to 103.7 from 103.9, which was the highest score since July 2011, survey results published by the European Commission revealed. Economists had forecast the indicator to remain unchanged at 103.9 in April.

Lending to euro area households and firms increased for the first time in three years in March and money supply growth accelerated more-than-expected after the announcement of quantitative easing by the European Central Bank. Bank lending rose 0.1 percent in March from the prior year, reversing a 0.1 percent fall in February. Adjusted for loan sales and securitization, credit to the private sector climbed 0.8 percent, following February's 0.6 percent increase.

A measure of future economic activity in Eurozone rose for the fifth successive month in March, signaling sustained improvement in economic activity for the coming months, the Conference Board said Wednesday. The Conference Board Leading Economic Index for the euro area climbed 0.7 percent to 105.1, after a 0.6 percent rise in February.

German consumer prices increased for the third straight month to a 5-month high in April, preliminary data from Destatis showed Wednesday. Consumer prices rose 0.4 percent year-on-year in April, the fastest since November when prices grew 0.6 percent. Inflation also matched economists' expectations. This was the third consecutive rise in prices.

U.K. retail sales are forecast to pick up next month after recording a slowdown in April, results of the Distributive Trades Survey from the Confederation of British Industry showed Wednesday. The retail sales balance fell to +12 percent from +18 percent in March. Economists had forecast 25 percent rise.

U.K. house prices increased at the fastest pace since June 2014, the Nationwide Building Society reported Wednesday. House prices were up 1 percent in April from the prior month, the strongest growth since June 2014. Economists had forecast house price growth to rise marginally to 0.2 percent from 0.1 percent in March.