
Reuters, (30/7) -- Gold inched lower
in quiet trading on Tuesday as participants largely stayed on the
sidelines ahead of a Federal Reserve policy statement on Wednesday that
may provide clues on the pace at which it plans to scale back its
bond-buying program.
Bullion pared earlier losses on signs the
U.S. economy may be slowing as data showed home prices in May rose less
than expected and consumer confidence waned in July.
The Fed is
scheduled to release a policy statement Wednesday afternoon after its
two-day meeting. Traders will be looking for clues as to when the U.S.
central bank will start tapering its $85 billion monthly bond purchases.
Gold
plunged 5 percent after the Fed's June meeting when it gave its most
explicit signal yet that it plans to wind down the era of easy money.
However, Fed chief Ben Bernanke's subsequent remarks about the need to
keep a stimulative policy in place given low inflation and an uncertain
market triggered a gold rally.
'If Bernanke comes out and
specifically indicates that there is underlying weakness in the jobs
market, then I think gold is going to go much higher,' said Jeffrey
Sica, chief investment officer at Sica Wealth, which manages over $1
billion in client assets.
Spot gold was down 58 cents to
$1,326.41 an ounce by 3:03 p.m. EDT (1903 GMT), having traded in a
narrow $10 range. U.S. gold futures for August delivery settled down
$4.40 to $1,324 an ounce, with trading volume about 20 percent below its
30-day average, preliminary Reuters data showed.
Fed officials
are likely to have a lively debate on how best to prepare financial
markets for a reduction of their bond-buying program but appear certain
to wait for further economic data before curtailing their stimulus.
Gold
moved above $1,300 last week for the first time in a month on
Bernanke's comments that any reduction in bond purchases was not set in
stone and depended on the strength of the economy.
The Fed previously said it was likely to begin reducing its stimulus program later in 2013 and halt it altogether by mid-2014.