Prices drop as dollar heads up following FOMC minutes
Bullion prices ended substantially lower on Wednesday, 20 November 2013 at Comex. Gold futures on Wednesday marked their lowest settlement since mid-July, pressured after the latest round of mixed U.S. economic data and by strength in the dollar, with prices falling even further in electronic trading after the release of minutes from the Federal Reserve's October meeting.
Ahead of the minutes, gold for December delivery dropped $15.50, or 1.1%, to settle at $1,258 an ounce on the Comex division of the New York Mercantile Exchange.
December silver declined by 28 cents, or 1.4%, to $20.06 an ounce. That was the lowest close for a most-active contract since early august.
The minutes, which were released after the Comex close, suggested that officials were looking for ways to exit or at least slow down, in fairly short order, the central bank's asset-purchase program, which has been seen as supportive of gold prices.
The U.S. Federal Reserve's FOMC minutes, released Wednesday afternoon, showed several members of the committee said at their October meeting that they could see the Fed tapering its $85 billion-a-month bond-buying program at one of its next few meetings. The committee members also saw the U.S. economy growing at a moderate pace and talked about better articulating to the public its strategies and forward guidance.
Gold and silver prices immediately dropped to their session lows and hit multi-month lows following the FOMC minutes release. The U.S. dollar index shot to its daily high on the news, which was also a bearish signal for precious metals traders.
Among economic reports expected for the day, better-than-expected October retail sales report set the stage for an upbeat open at Wall Street. The report pointed to an increase of 0.4% while the consensus expected a more modest uptick of 0.1%. More importantly, the report indicated the government shutdown had essentially no effect on consumer spending.
Among remaining economic data, business inventories rose 0.6% in September after increasing 0.4% in August. The consensus expected inventory levels to increase 0.4%.
Separately, existing home sales fell 3.2% to 5.12 million in October from an unrevised 5.29 million in September. The consensus expected home sales to fall to 5.20 million.
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