Gold falls from one-month high as investors watch out for Fed clues

NEW YORK/JOHANNESBURG — Gold prices retreated from a one-month high on Tuesday as equities gained and the markets awaited clues about monetary policy from the US Federal Reserve, which began its two-day meeting.

The market is not expecting an interest rate increase following the Fed’s two-day meeting, but it is looking for hints on the timing and extent of future moves.

Spot gold was down 0.20% at $1,251.90 an ounce by 1:50 p.m. EDT (1750 GMT), not far from the previous session’s peak of $1,258.79, its highest since June 23.

US gold futures settled down 0.20% at $1,252.10.

“The market is looking for clarity on the Fed’s tightening cycle and when they are going to start with the tapering (of monetary stimulus),” said ETF Securities analyst Martin Arnold.

Taking the shine off gold slightly, investors climbed into European and US equities after a string of solid corporate reports.

The US dollar rebounded above a 13-month low against a basket of currencies.

Markets give a 48% probability of a US interest rate increase before the end of the year, according to CME’s Fedwatch tool.

US single-family home prices accelerated at a slower pace in April, falling short of forecasts, while the S&P CoreLogic CaseShiller composite index of 20 metropolitan areas rose 5.70% in May on a year-over-year basis.

“Today’s Housing Price Index and S& P/ Case- Shiller Home Price Indices came in lower than expectations. This indicates no inflation, which the Fed is eyeing,” said Miguel Perez- Santalla, vice-president of Heraeus Metal Management in New York.

“If there is no inflation, the Fed is likely to stay its hand at raising too soon, raising doubts.”

Gold is often seen as an alternative investment during times of political and financial uncertainty.

“There is a dual- pronged attraction to gold at the moment, with low interest rates and investors looking at the metal as a hedge against US political uncertainty,” Mr. Arnold said.

In other precious metals, silver rose 0.60% to $16.54 an ounce after hitting its highest since July 3 at $16.64, holding just below the 50-day moving average at $16.65.

Platinum rose 0.60% to $930.60. In the previous session it touched $ 940.40, its highest in more than five weeks. Palladium advanced 1% to $ 856.80.