Bullions end at lowest levels in a week

Market awaits Wednesday's Fed decision

Bullion prices ended substantially lower on Tuesday, 18 March 2014 at Comex. Gold futures fell 1% on Tuesday to settle at their lowest level in a week, with easing concerns surrounding Ukraine and Russia contributing to another rally in U.S. equities, ahead of the much-awaited conclusion to the Federal Reserve's policy meeting this week.

Gold for April delivery fell $13.90, or 1%, to settle at $1,359 an ounce on the Comex division of the New York Mercantile Exchange.

Silver prices took an even bigger hit, with May silver losing 1.9%, or 41 cents, to end at $20.86 an ounce, also a one-week low.

Russian president Vladimir Putin delivered a speech to the Russian parliament Tuesday. He said Russia will not seek to annex other regions of Asia, after it annexed Crimea. Putin's remarks acted to assuage the market place, as U.S. stock indexes moved higher and the gold market moved lower.

Focus of the market place turns to the meeting of the U.S. Federal Reserve's Open Market Committee (FOMC), taking place on Tuesday and Wednesday. Fed Chair Janet Yellen will deliver her first press conference after the FOMC meeting's conclusion on Wednesday afternoon. It is expected the FOMC will continue on its tapering program, whereby monthly bond purchases are whittled down by $10 billion a month. Recent U.S. economic data has been a mixed bag, which is making it tougher for the market place to read what the Fed's intentions might be.

U.S. economic data released Tuesday was again a mixed bag and did not have a major impact on the markets. The data included the consumer price index, real earnings, new residential construction and building permits. The housing numbers were a bit stronger than expected and also helped to put some upside pressure on the stock indexes, which in turn put some more downside price pressure on the precious metals.

In details, Housing starts fell 0.2% in February to 907,000 from an upwardly revised 909,000 (from 880,000) in January. The consensus expected housing starts to increase to 915,000. After two months where starts surpassed one million, construction levels in January and February returned to their April - October 2013 pace. There wasn't much evidence of significant shocks from winter weather conditions. Building Permits rose to a seasonally adjusted annualized rate of 1,018,000, which was better than the consensus estimate of 955,000.

Consumer prices edged up 0.1% in February after increasing 0.2% in January. The consensus expected the CPI to increase 0.2%. Energy costs, which provided a sizable boost to the PPI, fell 0.5% in February. A 1.7% decline in gasoline prices offset a 3.6% increase in natural gas costs. Food price growth, which had been very low and stable for the past several months, shot up 0.5% in February. That was the largest one-month increase since September 2011. Most of the food components rose more than their long-term trends. That included a 1.2% increase in meats, poultry, fish, and eggs. Excluding food and energy, core CPI increased 0.1% for a third consecutive month in February. That was exactly what the consensus expected.

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