Gold Eases From 5-Wk High Ahead Of FOMC Announcement

London (Oct 30)  Gold eased from a five-week high early Wednesday, as traders weighed odds the Federal Reserve will not start tapering its bond-purchase program until early next year.

Billion traders are cautiously awaiting the end of the Fed's two-day policy meeting that may show whether more money should be taken off the table following last month's weak unemployment report in the wake of the government shutdown and the risk of another Washington standoff ahead. So far market participant believe the Fed will not cut back on its billion-friendly stimulus program.

Spot gold was 0.18% higher at $1.347.46 an ounce at 02:46 ET, compared with yesterday's close at $1,345.05. The day's range remains between $1,338.94 and $1,348.60.

The yellow metal is held back apparently amid rising uncertainty about a Fed "tapering" especially amid weak U.S. economic data. However, the impact of these bets on the markets is already priced in so we expect gold to hold ground near the year highs.

The FOMC announcement at 02:00 p.m. ET for the Oct. 29-30 policy meeting is widely expected to leave policy rate unchanged at its record low of 0.50% and its monthly $85 billion quantitative easing program on hold in a bid to drive down borrowing costs to spur recovery, dragging the dollar in the process and boosting dollar-denominated commodities.

Looking at the technical chart, gold retraced slightly yesterday, retesting the 50-days SMA, where price continues to hold above this support area around $1,336.00. Accordingly, the move is considered correctional so far, and the bullish scenario remains favored.