Gold prices edged higher on Tuesday as the dollar was weighed on by the US consumer data that was softer than expected.
According to the data, US made non-defense durable goods’ demand, excluding aircrafts dropped 1.7% in September, the largest drop in eight months.
Investors are focusing on the latest policy statement from the Fed, due on Wednesday afternoon.
Reuters quoted George Gero, RBC Capital Markets vice president as having said, ‘The rally after today’s durable goods number is somewhat reassuring the Fed meeting this week will not have any unusual language in reversing its continued low interest rates policy.”
Delaying the increase of interest rates could boost gold, which is a non-interest bearing asset.
Spot gold gained 0.3% at $1,228.47 per ounce after having hit a two-week low of $1,222.20 per ounce.
December delivery US Comex gold futures were up 10 cents at $1,229.40, with the volume in line with the 30-day average. Gains in gold are limited as the S&P 500 equities index climbed and as US data showers a surge in consumer confidence to a high of seven years in October.
The Fed is expected to announce the end of its bong-buying stimulus programs of five years, which is known as quantitative easing (QE).
According to analysts, the end of the QE is bearish for gold, which is a traditional inflation hedge.
According to Bloomberg, December delivery palladium futures gained 0.8% to $793.35 per ounce. The prices climbed for eight straight session, the longest rally since August 18. January delivery platinum futures climbed 0.9% to $1,266.30 per ounce.
Silver rose to 0.7% to $17.20 per ounce. Investor interest in silver is still soft. In October, the outflows from silver-backed exchange traded funds were 11.5 million ounces, the largest decline in a month since May 2013, according to a note written by the UBS.
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