Gold Falls for a Second Day as Traders Await Fed Meeting Outcome

(Bloomberg) -- Gold fell for a second straight session, extending declines after its worst daily loss since late November, as investors assessed U.S. inflation data and counted down to the conclusion of the Federal Reserve’s last meeting of the year later Wednesday.

Prices paid to U.S. producers posted a record annual increase of almost 10% in November, a surge that will sustain a pipeline of inflationary pressures well into 2022. That’s boosting the case for the Fed to tighten monetary policy, which is weighing on non-interest bearing assets such as precious metals. U.S. retail sales rose by less than forecast in November, suggesting that consumers are tempering purchases against a backdrop of the fastest inflation in decades.

All eyes are now on the central bank’s meeting, the results of which are released later Wednesday. The Fed could quicken the pace of its bond-buying taper and lay out a steeper path of interest-rate hikes, according to Bloomberg Economics. 

Bullion is heading for its first annual loss in three years amid diminishing monetary support from central banks, although uncertainties surrounding the impact of the new virus variant could stoke demand for haven assets. 

Spot gold was down 0.3% to $1,765.05 an ounce at 1:18 p.m. in New York after dropping 0.9% Tuesday. Bullion for February delivery fell 0.4% to settle at $1,764.50 on the Comex. Silver and platinum declined, while palladium fell to the lowest since March 2020. 

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