Weak day for precious metals

Traders look forward to Wednesday's FOMC decision

Bullion metal prices ended lower on Tuesday, 17 September 2013 at Comex. Prices slipped following surprise weekend news that former U.S. Treasury secretary Larry Summers withdrew his name for consideration for Chairman of the U.S. Federal Reserve, due to the likely acrimony his nomination would have brought. The day featured ahead of what is arguably the most important economic event of the autumn, the meeting of the U.S. Federal Reserve's Open Market Committee.

Gold for December delivery ended lower by $8.4 (0.6%) at $1,309.4 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday.

December silver fell $0.23 or 1% to $21.78 an ounce on Comex on Tuesday.

In the currency market, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, fell by 0.3%.

Traders and investors are looking forward to this week's meeting of the U.S. Federal Reserve's Open Market Committee (FOMC). The meeting began on Tuesday and ends at midday Wednesday. Fed Chairman Ben Bernanke will also hold a press conference Wednesday afternoon.

A majority of the market place believes the U.S. central bank at this week's meeting will announce it will begin to scale back, or taper its monthly bond-buying program. Some reckon the Fed will announce a $10 billion or $15 billion reduction in its $85 billion-a-month bond-buying program. The surprise to the markets could be if the Fed either does nothing at this meeting, or is more aggressive in its initial reduction in bond purchases. For the past several weeks the market place has been fixated on what the U.S. central bank will announce at the conclusion of this week's FOMC meeting.

On the economic front at Wall Street today, the Consumer Price Index for August didn't reveal any worrisome inflation signals. Total CPI and core CPI, which excludes food and energy, both rose just 0.1% from July. Over the last 12 months, total CPI is up 1.5% while core CPI is up 1.8%. That is below the 2.0% rate of increase seen for each in September 2012 when the Fed announced QE3.

The other piece of economic news today showed homebuilder confidence held pretty steady in September. The NAHB Housing Market index checked in at 58 (consensus 59) versus 59 for August.

At the MCX, gold prices for October delivery closed lower by Rs 64 (0.21%) at Rs 29,723 per ten grams. Prices rose to a high of Rs 30,275 per 10 grams and fell to a low of Rs 29,617 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed lower by Rs 431 (0.9%) at Rs 49,401/Kg. Prices opened at Rs 49,800/Kg and fell to a low of Rs 49,281/Kg during the day's trading.

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