Gold Ends Lower Ahead Of Fed Meet Outcome

(RTTNews) - Gold futures slipped for a third straight session to end a tad lower on Wednesday, ahead of the U.S. Federal Reserve's meet outcome later today with economists anticipating a further cut to the Fed's monthly bond purchasing program and leave rates unchanged.

In economic news, a Commerce Department report on Wednesday showed only a modest uptick in U.S. economic activity in the first three months of 2014, reflecting the impact of the severe winter weather. Meanwhile, a report from MNI Indicators showed the Chicago business barometer jumping to its highest level in six months, with business activity increasing at a substantially accelerated rate in April.

Meanwhile, private sector employment in the U.S. continued to show significant growth in the month of April, a report from payroll processor ADP showed Wednesday, with the pace of job growth exceeding estimates.

Gold for June delivery, the most actively traded contract, dropped $0.40 to close at $1,295.90 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday.

Gold for April delivery scaled an intraday high of $1,297.50 and a low of $1,284.90 an ounce.

On Tuesday, gold futures ended lower following some upbeat performance from U.S. and European equity markets.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 792.14 tons on Tuesday from its previous close of 794.14 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.50 on Wednesday, down from its previous close of 79.81 late Tuesday in North American trade. The dollar scaled a high of 79.92 intraday and a low of 79.46.

The euro traded higher against the dollar at $1.3865 on Wednesday, as compared to its previous close of $1.3812 late Tuesday in North America. The euro scaled a high of $1.3876 intraday and a low of $1.3776.

In economic news from the U.S., The Commerce Department said gross domestic product inched up by just 0.1 percent in the first quarter of 2014 compared to the 2.6 percent increase in GDP in the fourth quarter of 2013. The consensus estimate was for a 1.2 percent sequential increase in first quarter growth.

MNI Indicators said the Chicago business barometer surged up to 63.0 in April from 55.9 in March, with a reading above 50 indicating growth in Chicago-area business activity. Economists expected barometer at a reading of 57.0. The business barometer has thus bounced off the seven-month low set in March to reach its highest level since last October.

Meanwhile, ADP said private sector employment in the U.S. surged by 220,000 jobs in April compared to economist estimates for an increase of about 210,000 jobs. The report also showed notable upward revisions to the job growth in the two previous months, with private sector employment jumping by 209,000 jobs in March and 193,000 jobs in February.

The FOMC's monetary policy statement will be released at 2 pm ET. Economists widely expect the Fed to leave the Fed rates unchanged at 0-0.25 percent and announce a $10 billion taper to its bond purchase program.

German unemployment declined more-than-expected in April, indicating economic recovery to have pushed companies to hire more staff. The number of people out of work declined 25,000 from March to 2.872 million in April, the Federal Labor Agency reported Wednesday. This was the fifth consecutive decline in unemployment. Economists forecast unemployment to decrease by 10,000 in April.

Eurozone inflation accelerated less-than-expected in April, indicating slower pace of price increase that may not be sufficient to avert the risk of deflation. Inflation rose to 0.7 percent in April from a 52-month low of 0.5 percent in March, flash estimates from Eurostat showed Wednesday. However, the rate was slightly slower than the 0.8 percent forecast by economists.