Gold on track for first loss in 3 sessions as traders await Fed policy decision

Gold futures headed lower on Wednesday, on track to post their first loss in three sessions, ahead of a Federal Reserve decision that could set the near-term tone for bullion trading for the next several weeks.

December gold

GCZ19, +0.01%

 on Comex fell by 80 cents, or 0.05%, to $1,512.60 an ounce, threatening to snap a two-day climb for bullion. Prices for the most-active contract trade about 1% higher week to date.

Silver for December delivery

SIZ19, -0.88%,

meanwhile, declined by 16.5 cents, or 0.9%, at $17.975 an ounce, after a 0.6% gain on Tuesday.

All eyes will be on the Fed as its rate setting Federal Open Market Committee releases its policy decision at 2 p.m. Eastern Time. The central bank is widely anticipated to lower rates by a quarter percentage point, but investors may focus on the central bank’s communication on the health of the U.S. and global economies and the path of future policy.

“Traders will be looking for clues on December interest cuts,” said Chintan Karnani, chief market analyst at Insignia Consultants. “It seems the Federal Reserve will not disappoint the markets and deliver an interest rate cut,” but he size of the cut is key, he added.

The rate decision will be announced at 2 p.m. Eastern time, a half hour after gold futures settle on Comex. Fed Chairman Jerome Powell will host a news conference at 2:30 p.m.

Easy-money policies and worries about a global recession has mostly helped to boost demand for assets perceived as safe havens including gold.

The Fed statement on state of U.S. economy “will be useful only if they are clear on interest rate stance,” said Karnani, in a market update.

“Remember that every Tom, Dick and Harry, or the herd as I call them, are long in gold,” he said. “So a plain interest rate cut and a hawkish [Fed] can result in gold price correcting sharply first and then a rise.”

Gold and silver trade also saw some pressure from the U.S. dollar which was strengthening slightly. The ICE U.S. dollar index

DXY, +0.08%,

a gauge of the buck against a basket of six rival currencies, was up 0.1%. A stronger dollar can make assets priced in the currency less appealing to those using other monetary units.

Other metals traded on Comex headed lower, with December copper

HGZ19, -0.34%

 down a penny, or 0.4%, at $2.617 a pound. October platinum

PLV19, -1.19%

 shed $9.30, or 1%, at $934.60 an ounce and December palladium

PAZ19, -1.66%

 lost $32, or 2%, to $1,565.70 an ounce.

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