Gold fell for a second day in London before the U.S. Federal Reserve starts a policy meeting as investors weighed when the central bank will taper stimulus. Palladium declined.
The U.S. central bank, which begins a two-day meeting today, currently buys $85 billion a month of Treasury and mortgage debt. Fed Chairman Ben S. Bernanke said last month the pace of monthly purchases could be reduced if the employment outlook shows sustained improvement. Data due today may show U.S. housing starts rose in May, economists said.
“The atmosphere is clearly difficult for gold at the moment, and downside risks loom,” Joni Teves, an analyst at UBS AG in London, wrote today in a report. “It will either have to take a materially dovish statement and/or a significant scaling back in the Fed’s economic projections for greater upside prospects to emerge.”
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