Gold Loses Ground After FOMC Statement

Frankfurt (Oct 30)  Gold prices have fallen close to $1200 on Thursday as the metal continues to lose ground to the broadly-stronger US dollar. In the European session, the spot price per ounce stands at $1205.43, marking a three-week low. In the US, today’s highlights are US GDP and Unemployment Claims. Both indicators are expected to post strong figures, so we could see the dollar post gains in the North American session. As well, Federal Reserve Chair Janet Yellen will address an event in Washington.

The US dollar gained about 100 points on Wednesday, boosted by a hawkish Fed policy statement. The Fed said that the labor market is strengthening and inflation remains on target, although it did note that the labor market participation rate remains low. As expected the Fed completed the taper of its QE3 program. The asset-purchase program was initially started in 2008, at the height of the economic crisis, in order to boost a weak US economy. The termination of the QE is a symbolic step which is a vote of confidence from the powerful Fed that the US economy is on the right track.

US durable goods looked dismal in September. Core Durable Goods Orders dropped 0.2%, its second decline in three months. This was well short of the estimate of 0.5%. Durable Goods Orders followed suit with a decline of -1.3%. This was a second straight decline, and missed the estimate of 0.4%. There was much better news from CB Consumer Confidence, as the indicator climbed to 94.5 points, up sharply from 86.0 points. This easily beat the estimate of 87.4 and marked a 7-year high. An increase in consumer confidence usually translates into stronger consumer spending, which is a critical component for economic growth.

Source: FXstreet