Gold Declines as Fed Sees `Moderate' Pace of Growth

Gold fell after Federal Reserve policy makers said the economy is still expanding at a “moderate” pace, giving themselves the option to tighten policy at their next meeting in December.

Even with a slower pace of recent job gains, “labor market indicators, on balance, show that underutilization of labor resources has diminished since early this year,” the Federal Open Market Committee said in a statement Wednesday following a two-day meeting in Washington.

Gold has slumped about 5 percent in the past year as the U.S. economic recovery gained momentum, fueling speculation the country may be strong enough to withstand a global slowdown and tackle the first interest rate increase since 2006. Higher borrowing costs curb the allure of gold by making it less competitive against assets that pay interest, such as bonds.

“The less-dovish-than-expected FOMC is resuscitating just a bit the case for a December rate hike, causing gold to shed some of today’s gains,” Tai Wong, the director of commodity products trading at BMO Capital Markets in New York, said in a telephone interview. “Some people are concerned about the possibility of an interest-rate increase.”

Bullion for immediate delivery slipped 0.3 percent to $1,163.80 an ounce at 2:26 p.m. in New York, after climbing as much as 1.4 percent, according to Bloomberg generic pricing.

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