Gold Holds Above $1,350, Federal Reserve to Keep QE at $85B

Gold

On Monday, gold (NYSEARCA:GLD) futures for December — the most active contract — edged 30 cents lower to close at $1,352.20 per ounce, while silver (NYSEARCA:SLV) futures declined 10 cents to finish at $22.54. Major exchange-traded funds, like the SPDR Gold Trust and iShares Silver Trust, finished the day mostly unchanged.

Gold and silver both held relatively steady on Monday as the economy continues to show signs of weakness. The Pending Home Sales Index, a forward-looking indicator based on contract signings, plunged 5.6 percent to 101.6 in September compared to a downwardly revised 107.6 in August, according to the National Association of Realtors. Making matters worse, pending home sales fell below their year-ago level for the first time in 29 months.

After posting its strongest pace since 2006 in May, the index has now declined for four consecutive months to reach its worst level since December. Economists expected the index to remain mostly unchanged.

All eyes will be on the Federal Reserve in the coming days — the central bank holds its Federal Open Market Committee meeting on Tuesday and Wednesday. In contrast from last month’s meeting, the Federal Reserve is not expected to dial down its bond purchases, which currently stands at $85 billion per month. Last week, Chicago Fed President Charles Evans said: “October is a tough one. December? I think we need a couple of good labor reports and evidence of increasing growth, GDP growth. It’s probably going to take a few months to sort that out.”

By the end of the trading day, shares of the SPDR Gold Trust (NYSEARCA:GLD) increased 0.1 percent, while the iShares Silver Trust (NYSEARCA:SLV) dipped 0.1 percent. Gold miners (NYSEARCA:GDX) Barrick Gold (NYSE:ABX) and Newmont Mining (NYSE:NEM) gained 0.6 percent and 0.9 percent, respectively. Shares of First Majestic Silver (NYSE:AG) and Endeavour Silver (NYSE:EXK) declined 2.1 percent and 0.9 percent, respectively.

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Disclosure: Long EXK, AG, HL, PHYS