Updated from 11:41 a.m. ET with settlement prices
NEW YORK (
closed slightly lower Tuesday as the Federal Open Market Committee convened for a two-day meeting to discuss forward guidance on the monetary policy of the
Gold for February delivery shed $4.80 to settle at $1,709.60 an ounce at the Comex division of the New York Mercantile Exchange. The
traded as high as $1,715.80 and as low as $1,706 an ounce, while the spot price was losing $4.20, according to Kitco's gold index.
The slight dip suggested little enthusiasm in the yellow metal, and a decision by traders to wait until the policy-writing wing of the Fed emerged with its latest announcement on Wednesday.
Economists and analysts have predicted
that the Fed may reveal the implementation of additional stimulus on top of the $40 billion open-ended, mortgage-backed security purchasing program the central bank announced in September.
" [T]he Fed will likely announce an open-ended bond-buying program designed to mitigate the impact of the potential tax increases that a deficit-reduction agreement might yield," Jon Nadler, senior metals analyst at Kitco Metals, wrote in a research note on Tuesday.
Part of this consideration has been influenced by the impending expiration of Operation Twist at the beginning of 2013.
Additional monetary stimulus could be viewed by investors as more inflationary policy by the Fed, which has applied multiple supportive measures since the end of 2008.
Nadler pointed out, though, that more easing by the Fed could be seen as an "economy-supportive measure" in the event that the United States goes over the full so-called
-- when tax relief measures and deep spending cuts will automatically go into effect.
Fiscal cliff negotiations remained silent on Monday as White House Press Secretary Jay Carney told reporters aboard Air Force One that
he believed the best prospect of reaching an agreement was to not read details of the conversations between President Obama and head lawmakers
House Speaker John Boehner (R., Ohio) met with Obama to resume discussions between the two sides, but aides refused to release any details to the press. A Boehner spokesman did say that lines of communication remained open -- a sentiment echoed by Carney.
Though many investors see gold as a safe-haven hedge in times of economic crisis, a full-fledged fiscal cliff that brings on a recession as opposed to more inflation would make the yellow metal an unappealing asset.
for March delivery fell 36 cents to close at $33.02 an ounce, while the
U.S. dollar index
was dropping 0.37% to $80.02.
In Asia, the Reserve Bank of India has campaigned to reduce the country's current account deficit, and it has targeted gold, among other imports, to curb the problem, according to Nadler.
Nadler noted that the precious metal has been the second-largest import to contribute to the current account deficit in India, behind oil.
Physical purchasing by India at the end of the year traditionally provides strength to gold prices, but this hasn't necessarily been the case in 2012.
In Europe, Germany's ZEW survey -- a gauge of economic sentiment there -- ticked up to 6.9 in December, which was far better than the -12 expected by economists. November's survey came in at -15.7. The promising news served to offset the glum 2013 economic prospects the European Central Bank had previously forecast. Improving conditions would suggest a possible end to quantitative easing measures by the ECB, but it's difficult to argue that Germany's ZEW survey suggested a broader positive economic trend in the country and around the eurozone region.
SPDR Gold Trust
was losing 0.21%, while
iShares Gold Trust
was off 0.18%.
-- Written by Joe Deaux in New York.