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Gold edges lower as traders await Fed decision

Gold futures drifted slightly lower Wednesday morning, with traders awaiting the outcome of a Federal Reserve policy meeting that’s expected to provide the market with direction.

Gold for December delivery


was down $3.40, or 0.2%, at $1,786 an ounce on Comex. December silver


was up 10.3 cents, or 0.4%, at $23.61 an ounce.

“Investors are showing a clear ‘wait and see mode,’” said Carlo Alberto De Casa, analyst at Kinesis Money, in emailed comments.

“Traders would like to know more about the next decisions of the FOMC before increasing their gold exposure. Therefore, the price is languishing in the $1,780-$1,790 area, without being able to find a clear directionality,” he wrote.

The Fed is fully expected to announce that it’s ready to begin scaling back its monthly asset purchases. Investors will be looking for clues as to whether policy makers have changed their expectation that inflation will prove “transitory,” as well as for any pushback against rising market expectations the Fed will move more quickly and aggressively than previously thought to raise interest rates.

The Fed’s policy announcement will come at 2 p.m. Eastern, after the close of regular trading for metals futures. Fed Chairman Jerome Powell’s news conference begins at 2:30 p.m.

Read: 5 things to watch for when Fed meets Wednesday

De Casa said gold investors are braced for central bank decision, unlike when the Fed prepared to taper asset purchases in 2013.

“Chances of another taper tantrum for gold seems to be reduced. In 2013, indeed, gold lost around 28% of its value,” he said. “So far [year to date] bullion posted a loss of around 6%, which was in good part mitigated — for investors outside the U.S. — by the recovery of the greenback on the forex market. 2021 is therefore on track for being much different from 2013.”

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