Gold dips under $1,200 ahead of Fed meeting
New York (Dec 16) Gold prices lost ground Tuesday, erasing early gains that followed worldwide turbulence briefly triggered by hand-wringing over Russia’s rapidly tumbling ruble.
Gold for February delivery GCG5, -0.89% settled down $13.40, or 1.1%, at $1,194.30 an ounce. The contract jumped above $1,220 early Tuesday as U.S. stocks slumped, but it then turned negative while equities pared their early losses.
Meanwhile, March silver SIH5, -4.91% dived by 81 cents, or 4.9%, to settle at $15.75 an ounce.
The potential for more hawkish signals from the Federal Reserve also put pressure on gold. The U.S. central bank began a two-day meeting Tuesday, and a new policy statement and news conference are expected at the conclusion of the meeting on Wednesday. The market anticipates higher rates in 2015, which could weigh on gold since the yellow metal doesn’t generate a yield.
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Gold and oil prices have been moving in tandem recently, but wasn’t entirely the case Tuesday, as the U.S. crude benchmark CLF5, +0.09% flirted with gains, though Brent crude LCOF6, -2.30% dropped.
The dollar DXY, -0.54% lost ground against its rivals on Tuesday, but that wasn’t enough to keep gold in the green. Commodities like gold that trade in dollar terms often benefit from a weaker greenback.
The buck USDJPY, -1.04% was lower against the yen as investors piled into the Japanese currency on its safe-haven perception. That came after the Russian ruble USDRUB, +11.35% collapsed to about 79 to the dollar after the central bank hiked its interest rates to 17% from 10.5% — a rate hike intended to staunch the Russian currencies descent.
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Rumors among traders about whether Russia is selling gold, weighed on prices, but Mark O’Byrne, research director at bullion dealer GoldCore, characterized that talk as speculation.
“Market chatter regarding sales of Russian gold reserve is just that chatter,” he told MarketWatch in an email.
In other metals trading, January platinum PLF5, -1.49% settled down 1.5% at $1,196.50 an ounce, while March palladium PAH5, -2.60% dropped by 2.3% to end at $784 an ounce. High-grade copper for March delivery HGH5, -0.57% fell 2 cents, or 0.7%, to settle at $2.86 a pound.