Gold Looks to Fed

October 23, 2012 at 08:30

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Gold dropped before the policy- setting Federal Open Market Committee meets from today amid signs that the U.S. economy is improving, reducing demand for bullion as an alternative investment. Silver and platinum fell.

Bullion, up 10 percent this year, has erased gains made after the Federal Reserve announced a third round of debt-buying on Sept. 13. The FOMC meeting concludes tomorrow. Stimulus measures taken by central banks from Europe to China and Japan helped drive gold to an 11-month high of $1,796.05 on Oct. 5.

“The Fed has previously talked up its capacity to support the U.S. economy, but we are not expecting any signs of fresh stimulus,” Australia & New Zealand Banking Group Ltd. analysts led by Mark Pervan wrote in a note today. “The $1,725 level appears to be the critical level of support.”

Data this week may show consumer spending picked up in the third quarter while durable-goods orders rebounded last month from the biggest drop since January 2009, according to economists’ estimates before the reports. The jobless rate fell to 7.8 percent in September, the lowest since President Barack Obama took office in 2009, according to data released Oct. 5.