Prices register moderate losses ahead of Fed meeting
Bullion prices ended lower on Thursday, 10 December 2015 bucking a trend that has seen the precious metal record modest back-to-back gains, as investors grew more wary ahead of the U.S. Federal Reserve's meeting next week.
February gold shed $4.50, or 0.4%, to settle at $1,072 an ounce. Prices edged higher over the past two trading sessions. So far this month, the metal has now seen an equal number of up days as down days.
Meanwhile, March silver lost 7.9 cents, or 0.6%, to finish at $14.11 an ounce.
The gold often trades opposite the direction the dollar, as a strong dollar raises the cost of buying the metal for investors using other currencies. On Thursday, the ICE U.S. Dollar Index headed higher, weighing gold prices, but it's still down about 0.3% for the week so far.
Market participants say gold prices had been lifted in recent sessions by recent weakness in the dollar compared with the euro. The euro climbed after European Central Bank President Mario Draghi disappointed markets last Thursday when he failed to deliver a more expansive stimulus package than the market was expecting.
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Still, expectations that the Fed will decide to hike interest rates at the conclusion of its meeting this Wednesday has been growing, keeping sentiment on gold mainly bearish. Higher interest rates increase the cost of storing commodities, and make them less attractive for investors seeking better returns across assets. Higher rates can also boost the dollar, which would make dollar-denominated gold even less attractive. The Federal Reserve is widely expected to raise interest rates for the first time in almost a decade next week at its two-day policy meeting starting 15 December 2015.
On the data front, new applications for U.S. unemployment benefits jumped by 13,000 to 282,000 in the seven days ended Dec. 5, the highest level in five months. The increase was more than expected, but investors showed little reaction. Also, the prices Americans paid for imported goods declined 0.4% in November, driven by a 2.5% plunge in energy prices. Import prices have fallen every month in 2015 except May and June.
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