Gold falls on dollar rise, awaits Fed statement

NEW YORK/LONDON, Reuters (30/10) - Gold fell on Tuesday, retreating from the previous session's five-week high, as a dollar rise and encouraging U.S. consumer spending data prompted investors to take profits ahead of a policy decision by the U.S. Federal Reserve.

Bullion prices slipped after a gauge of U.S. consumer spending rose in September, but falling car sales pointed to sluggish economic growth.

The Fed began a two-day policy meeting in which it is widely expected to confirm it will continue buying bonds at the rate of $85 billion a month in a policy statement on Wednesday.

Spot gold was down 0.5 percent to $1,344.89 an ounce by 2:40 p.m. EDT (1840 GMT).

It hit its highest since Sept. 20 at $1,361.60 on Monday, as disappointing U.S. manufacturing and pending home sales data reinforced the view the economy is not yet strong enough for the Fed to start tapering stimulus.

U.S. gold futures for December delivery settled down $6.70 an ounce at $1,345.50, with volume about 15 percent below its 30-day average, preliminary Reuters data showed.

Gold prices have fallen nearly 20 percent this year in the expectation of imminent tapering by the Fed.