Gold Ends Lower On Strong Dollar, Fed Policy Meet

(RTTNews) - Gold futures ended lower on Tuesday, with the dollar strengthening against a basket of major currencies and with U.S. consumer confidence plunging. The U.S. Federal Reserve's policy meet began with investors expecting the Fed to keep its quantitative easing program intact following a slew of downbeat data signaling a wobbly economy.

While the Fed is widely expected to maintain its asset purchase program at the current pace, investors will be looking for indications regarding future tapering. Earlier today, the U.S. Federal Reserve began its two-day meet to review and assess its economic policy with analysts anticipating the central bank to maintain its $85 billion monthly asset purchase program intact.

In some soft economic news from the U.S., a Commerce Department report showed an unexpected drop in retail sales due to sharply lower auto sales, while a Conference Board report indicated a substantial deterioration in consumer confidence in October, with the government shutdown weighing on expectations.

Meanwhile, a Labor Department report indicated a modest decrease in producer prices in September, with a notable drop in food prices offsetting an increase in energy prices. The only bright spot was the U.S. business inventories report which rose in line with estimates in August.

Gold for December delivery, the most actively traded contract, dropped $6.70 or 0.5 percent to close at $1,345.50 an ounce Tuesday on the Comex division of the New York Mercantile Exchange.

Gold for December delivery scaled an intraday high of $1,360.40 and a low of $1,339.80 an ounce.

Gold ended a shade lower yesterday, ahead of the U.S. Federal Reserve's policy meeting, even as the dollar traded higher against a basket of major currencies.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 872.02 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.61 on Tuesday, up from 79.33 late Monday in North American trade. The dollar scaled a high of 79.67 intraday and a low of 79.29.

The euro traded lower against the dollar at $1.3741 on Tuesday, as compared to its previous close of $1.3785 late Monday in North America. The euro scaled a high of $1.3813 intraday and a low of $1.3738.

In economic news, a Conference Board report on Tuesday showed U.S. consumer confidence deteriorated in October, largely due to the government shutdown. The consumer confidence index tumbled to 71.2 in October from an upwardly revised 80.2 in September. Economists expected the index to fall to 75.0 from the 79.7 originally reported for the previous month. The index was its lowest level since April.

U.S. retail sales unexpectedly saw a modest drop in September, with auto sales showing a significant decrease, a Commerce Department report showed Tuesday. Retail sales for September edged down by 0.1 percent following a 0.2 percent increase in August. Economists expected retail sales to come in unchanged. The unexpected drop was largely due to a 2.2 percent decrease in motor vehicle and parts dealer sales, which followed a 0.7 percent increase in the previous month.

Business inventories in the U.S. rose in line with estimates in August, a report from the Commerce Department showed Tuesday. Business inventories rose by 0.3 percent in August following a 0.4 percent increase in July. The increase was in line with expectations.

With a notable drop in food prices offsetting an increase in energy prices, producer prices in the U.S. unexpectedly dropped in September, a report from the Labor Department indicated Tuesday. Producer price index edged down by 0.1 percent in September following a 0.3 percent increase in August. Economists expected prices to increase by about 0.2 percent in September.