Gold Prices Dip as Fed Meeting Gets Underway

Washington (Jan 28)  Gold prices are below $1,260/oz this morning as the Fed’s two day meeting starts today. The precious metal was trading as low as $1,252/oz, but has recovered some of its early losses over the past 30 minutes. Right now, gold is trading down 0.5% at $1,257/oz.

The Fed will announce its policy changes tomorrow. Most analysts expect to see another $10 billion cut in monthly bond purchases. It will also be the last meeting by Ben Bernanke. Janet Yellen will take over as chair of the Federal Reserve at the end of the month.

Expectations of another taper was one reason for last week’s down market as emerging markets saw their currencies tank. These markets have stabilized this week.

Economic data will be the primary focus for gold investors today. Gold saw a little boost after U.S. durable goods orders disappointed. The Commerce Department reported durable goods orders fell 4.3% in December. Weak demand for transportation equipment, computers and capital goods were to blame.

November’s orders were revised lower to 2.6% after initially reported as 3.4%. Economists were expecting durable goods orders to print a 1.8% rise last month. Even more concerning, durable goods orders fell despite a strong uptick in aircraft orders at Boeing. Aircraft orders are often volatile and any increase in them usually leads to an inflated durable goods number.

Core capital goods fell 1.3% in December, missing estimates of a 0.5% increase.

The miss in durable goods helped push gold prices off its low and back above $1,260/oz briefly.

Wall Street trimmed gains after the news with the Dow up 38 points in pre-market trading and the S&P 500 up 3.2 points. The Nasdaq is down 17 points, but is being weighed down by Apple which is down 7% in early trading.