By Ben Rooney
After surging to a
new trading high above $1,070 an ounce, prices
end lower as the Federal Reserve says inflation
Gold closed slightly lower Wednesday, after
surging above $1,070 an ounce, as investors
positioned themselves just prior to the release
of the Federal Reserve meeting minutes.
December gold fell $2 to settle at $1,064.00 an
ounce, after trading above $1,070.00 an ounce
earlier in the session. Prices rose overnight to
an all-time trading trading high of $1,072.00 an
"After the market made the move to a new high
overnight, we saw a slight pullback as traders
booked profits ahead of the FOMC," Adam
Klopfenstein, senior market strategist at
commodities brokerage firm Lind-Waldock, said
before the minutes were released.
Gold, which has gained more than 20% this year,
has been supported by worries that government
efforts to stimulate the economy could set the
stage for inflation as the economy recovers.
However, minutes from the September meeting of
Federal Reserve's Open Market Committee
indicated that the central bank expects
inflation to decrease over the next few years.
"With the significant underutilization of
resources expected to persist through 2011, the
staff forecast core inflation to slow somewhat
further over the next two years from the pace of
the first half of 2009," according to the
At the same time, gold prices have been boosted
by the weak U.S. dollar, which fell to a
14-month low Wednesday on speculation that U.S.
interest rates will remain low for a
longer-than-anticipated period of time.
The dollar index, which gauges the greenback's
value against a basket of rival currencies, slid
to 75.45, marking its lowest level since August
The weak dollar also boosted oil prices, which
rose above $75 a barrel for the first time this
A softer greenback makes commodities that are
priced in dollars, such as gold and oil, cheaper
for investors using other currencies.
Investors will get more inflation data Thursday,
when the government releases its September
Consumer Price Index.
The closely watched inflation gauge is expected
to show an increase of 0.2% in September,
compared to a 0.4% rate the month before,
according to a consensus of economists surveyed
Consumer prices excluding volatile food and
energy costs, the so-called core CPI, are
expected to have risen 0.1%, the same rate of
increase as in August.