Metals Stocks: Gold resumes decline in lead-up to Fed meeting

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Gold prices fell Thursday and were at risk of settling lower for a fourth time in five sessions as the U.S. dollar gained ahead of the latest policy update from the Federal Reserve.

December gold

GCZ8, -0.25%

 was down $3.80, or 0.3%, at $1,224.90 an ounce, so far logging about a 0.7% decline for the week. December silver

SIZ8, -0.92%

 fell 13.9 cents, or nearly 1%, to $14.43 an ounce, and has fallen 2.2% for the week to date.

Gold futures rose on Wednesday, buoyed briefly by a weaker dollar and lower bond yields in the wake of midterm elections that left the U.S. with a divided Congress. A weaker dollar is seen as a benefit for gold, as it makes dollar-priced commodities cheaper to buyers using other currencies, and vice versa. Split power across the chambers is expected to complicate further government stimulus, including additional tax cuts.

On Thursday, however, the ICE U.S. Dollar Index

DXY, +0.11%

a measure of the U.S. currency against six major rivals, bounced back into the green. The gauge has climbed more than 4% year to date, boosted by a tightening Federal Reserve.

The Fed concludes its latest two-day policy meeting at 2 p.m. Eastern time, after gold futures settle. The meeting isn’t expected to yield major policy changes, but an interest-rate hike is expected in December. On Thursday, market participants will be watching for the central bank’s insights about the health of the economy, its expectations for inflation and any lingering effects of a protracted trade spat between the U.S. and China.

Read: Fed to remain stoic in face of market gyrations

“With the consensus pricing in a 25-basis-point December hike, the board is expected remain consistent with its ‘gradual’ hiking communication,” said Dean Popplewell, vice president of market analysis at Oanda. “The U.S.’s strong growth outlook and tightening labor market will allow for hikes to continue in 2019, but it’s the pace of hikes that the markets want to see – has [the Fed’s] views changed with the recent equity volatility?”

In other metals trade, January platinum

PLF9, -0.36%

 fell 0.4% to $875.50 an ounce, while December palladium

PAZ8, -0.05%

 fell 0.1% to $1,119.20 an ounce. December copper

HGZ8, -0.74%

 declined by 0.7% at $2.734 a pound.

Among exchange-traded funds, SPDR Gold Shares

GLD, -0.13%

 shed 0.2%.

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