Gold Ends Lower In Cautious Trade Ahead Of Fed's Decision

(RTTNews) - Gold futures ended lower on Thursday, as investors await the Federal Reserve's monetary policy meet outcome, with focus largely on a possible hike in interest rates.

With the Fed meeting scheduled to conclude shortly, the precious metal slipped with investors preferring the sidelines, as analysts seemed to think a rate hike in September as unlikely.

Global stock markets were largely on the positive territory, although have been volatile of late on the possibility of monetary tightening this month. However, uncertainty ahead of this afternoon's monetary policy announcement from the Federal Reserve continued to weigh on markets.

Economic news too have been mixed for any real direction.

A Labor Department report on Thursday showed first-time claims for U.S. unemployment benefits to have dropped unexpectedly in the week ended September 12, with jobless claims falling to a nearly two-month low.

A report from the Commerce Department showed new residential construction in the U.S. to have decreased in August, although building permits showed a notable increase.

The Federal Reserve Bank of Philadelphia on Thursday said manufacturing conditions in the mid-Atlantic region were mixed in September, although the headline index of regional manufacturing activity unexpectedly indicated a contraction.

Gold for December delivery, the most actively traded contract, dropped $2.00 or 0.2 percent, to settle at $1,117.00 an ounce, on the Comex division of the New York Mercantile Exchange on Thursday.

Gold for December delivery scaled an intraday high of $1, 122.60 and a low of $1,114.70 an ounce.

On Wednesday, gold prices for December delivery jumped $16.40 or 1.5 percent, to settle at $1,119.00 an ounce, ahead of the Federal Reserve's monetary policy meet outcome, even as the consumer-price report from the U.S. showed inflation to have ticked down short of the Fed's target for a rate hike.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 678.18 tons on Thursday from its previous close.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 95.24 on Thursday, down from its previous close of 95.33 in late North American trade on Wednesday. The dollar scaled a high of 95.39 intraday and a low of 95.11.

The euro trended higher against the dollar at 1.1327 on Thursday, as compared to its previous close of 1.1292 in North American trade late Wednesday. The euro scaled a high of 1.1339 intraday and a low of 1.1286.

On the economic front, a Labor Department report on Thursday showed initial jobless claims dropped to 264,000, a decrease of 11,000 from the previous week's unrevised level of 275,000. Economists expected jobless claims to come in unchanged.

New residential construction in the U.S. decreased in August, with housing starts dropping 3.0 percent to an annual rate of 1.126 million in August from the revised July estimate of 1.161. Economists expected housing starts to drop to a rate of 1.168 million from the 1.206 million originally reported for the previous month, reflecting a 3.2 percent decrease.

The Federal Reserve Bank of Philadelphia on Thursday said the headline index of regional manufacturing activity unexpectedly dropped, with the Philly Fed's diffusion index of current activity tumbling to a negative 6.0 in September from a positive 8.3 in August. The negative reading indicates a contraction in manufacturing activity. Economists expected the index to dip to a positive 6.3.

Elsewhere from Europe, eurozone construction output rebounded in July, logging the biggest growth in two years, Eurostat reported Thursday. Construction output grew 1 percent in July from June, when it fell 1.2 percent. This was the fastest growth since August 2014, when it rose 1.1 percent.

U.K. retail sales in August grew for the first time in three months as school uniform sales boosted clothing turnover. Retail sales including automotive fuel advanced 0.2 percent month-on-month in August after staying flat a month ago, data from the Office for National Statistics revealed Thursday. This was in line with economists' expectations.

From Asia, Japan posted a merchandise trade deficit of 569.659 billion yen in August, the Ministry of Finance said on Thursday. That missed forecasts for a shortfall of 542.5 billion yen following the 268.4 billion yen deficit in July.