Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold inched down 40 cents to close just under $1,166 as traders held their positions in a tight range ahead of tomorrow's conclusion of the October meeting of the FOMC.

The Fed began its two-meeting on monetary policy today, and while almost no one expects a rate increase this month, all eyes will search tomorrow's policy statement for hints of when. Fed Chair Janet Yellen has said that tightening is likely to begin before the year is out, if only slightly, data permitting.

But recent data has been anything but permitting, including a wave of disappointing economic reports published today. Orders for durable goods like heavy machinery fell in September for the second month, according to the Commerce Department, as did a key gauge of business investment. Consumer confidence fell in October, the Conference Board reported, and growth in the services sector fell to a nine-month low in the latest Markit Flash PMI.

The dollar edged up against a basket of rivals as traders weighed the possible timing of the Fed's rate hike against strong hints that central banks in Europe, Japan, and China will soon deepen monetary easing to stimulate their economies and combat deflation. If tomorrow's Fed statement leans toward December, the dollar is likley to rise further, pressuring gold and other commodities gold denominated in it for international trade.

Global demand for physical gold surged in Q3, according to the Q3 update of the Thomson Reuters/GFMS Gold Survey, published today. Purchases of gold bars and coins rose by 7% over Q2 and 26% year-over-year in Q3, led by India's 30% increase in retail gold investment. Physical sales in China, the world's second biggest gold market behind India, rose 26%. Central banks increased their purchases by 13%, to 132 tonnes.

The other precious metals closed lower, with silver slipping 0.3% while platinum and palladium lost 0.8% each.

At the Comex close: December delivery dipped 40 cents $1,165.80; December silver slid 4 cents to $15.86; January platinum lost $8.30 to $989.20; and December palladium fell $5.15 to $678.75 an ounce.