Gold futures ended lower on Wednesday, ahead of the two-day Federal Reserve policy meet outcome with the dollar trending higher against a select band of currencies.
Markets expect no change to the Fed rate, but await cues as to when the first rate hike may come. Some analysts predict tightening in April, while others believe the Fed will hold off until June or even later. The Fed's decision is expected at about at 2 pm ET today.
A stronger dollar has also weighed on commodities. The dollar jumped to an 11-year peak against the euro on fears that problems with Greece will threaten the eurozone.
Gold for February delivery, the most actively traded contract, shed $5.80 or 0.4 percent, to settle at $1,285.90 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday.
Gold for February delivery scaled an intraday high of $1,293.30 and a low of $1,282.70 an ounce.
On Monday, gold ended higher at $1,291.70 an ounce, up $12.30 or 1.0 percent, as the dollar trended lower after some disappointing durable goods orders data from the U.S., even as investors remained focused on the crucial Federal Reserve's policy meet outcome.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, increased to 752.70 tons on Wednesday from its previous close of 743.44 tons on Tuesday.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 94.26 on Wednesday, up from its previous close of 94.08 late Tuesday in North American trade. The dollar scaled a high of 94.45 intraday and a low of 93.97.
The euro trended lower against the dollar at $1.1343 on Wednesday, as compared to its previous close of $1.1381 late Tuesday in North American trade. The euro scaled a high of $1.1384 intraday and a low of $1.1308.
On the economic front, China's consumer sentiment decreased marginally in January, a survey by MNI and Westpac showed Wednesday. The Westpac-MNI consumer sentiment index edged down to 112.1 in January from 112.5 in December.
Germany's consumer confidence improved strongly to a 13-year high at the start of the year, as a collapse in energy prices boosted disposable income and raised room for more spending, survey data from the GfK showed Wednesday. The forward-looking consumer confidence index rose more-than-expected to 9.3 in February from 9.0 in January. This was the highest since November 2001, when the score was at 9.6. The February reading was expected to rise marginally to 9.1.
Germany's import prices declined at a faster-than-expected pace in December, data from the statistical office Destatis showed Wednesday. The import price index fell 3.7 percent year-on-year in December, faster than November's 2.1 percent decline. Economists had forecast a 3.4 percent decrease for the month.
The German government also lifted its growth projections for 2015, citing robust consumer spending. The economy ministry expects the economy to expand 1.5 percent this year, up from the prior estimate of 1.3 percent. Gross domestic product was up 1.5 percent in 2014.
France's consumer confidence remained stable in January, defying expectations for a rise, data from statistical office INSEE showed Wednesday. The consumer confidence index came in at 90 in January, the same as in December. This was less than the 91 score expected by economists. Unemployment hit a record high in December, data from the Labour Ministry showed Tuesday. The number of unemployed people rose 0.2 percent or by 8,100 over the previous month to 3,496,400 in December.
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