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DJ Silver 33.00, Gold 1672.70, Eases Ahead Of FOMC Minutes
Apr 03, 2012 By Tatyana Shumsky Of DOW JONES NEWSWIRES

--Comex June gold down 0.1% at $1,678.40/oz
--Gold traders "anxious" ahead of Fed minutes
--Stronger dollar weighs on gold

NEW YORK (Dow Jones)--Gold futures slipped Tuesday as traders worried about what the Federal Open Market Committee meeting minutes, due later in the day, would say about the bank's stance of further monetary stimulus.

The most actively traded contract, for June delivery, was recently down $1.30, or 0.1%, at $1,678.40 a troy ounce on the Comex division of the New York Mercantile Exchange.

The Federal Reserve's policy setting committee is due to release their latest meeting minutes at 2 p.m. EDT. Gold traders will be scouring the documents for any clues about shifts in policy and hints about the committee's stance of a third round of monetary stimulus, known as QE3.

"We could see the downward trend continue as participants grow anxious about the release of the FOMC minutes later today and what it might say or imply about the prospects for additional quantitative easing," Marc Ground, a metals analyst with Standard Bank, said in a note. "We don't feel that there will be any major changes to the current stance, however, we would not underestimate the market's capacity to read between the lines, which could see some price reaction."

Fed speeches have set the tone for the gold market over the past few months. Gold futures plunged more than $100 during Chairman Ben Bernanke's speech on Feb. 29 which avoided any mention of QE3 and sparked worries the stimulus measure was off the table for good.

By contrast, a Bernanke speech on March 26 swept prices higher after he said the U.S. labor market recovery was fragile and that the bank's accommodative policies must remain in place to support growth.

Gold prices benefit from monetary easing, which tends to erode the value of paper currencies, boosting demand for hard assets like gold.

Moreover, many investors worry that the Fed's easy money policies will trigger high inflation down the road. These market participants have flocked to buy gold as an inflation hedge and a store of wealth.

A stronger dollar also pressured gold prices. The greenback rallied against a basket of international currencies as tracked by the ICE Dollar Index, with this measure recently at 78.917, up from 78.820 earlier.

Gold futures are denominated in dollars and can seem more expensive to investors using other currencies when the greenback rallies, sapping their interest in these assets.

-By Tatyana Shumsky, Dow Jones Newswires; 212-416-3095; [e-mail]
(END) Dow Jones Newswires
04-03-12 0959ET

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