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Gold futures fall as traders eye dollar, oil

Gold futures prices retreated Thursday morning as traders mulled the Federal Reserve's decision to stand pat on interest rates and eyed moves in the U.S. dollar and oil

SAN FRANCISCO (MarketWatch) -- Gold futures prices retreated Thursday morning as traders mulled the Federal Reserve's decision to stand pat on interest rates and eyed moves in the U.S. dollar and oil.
"With the U.S. Fed pausing as expected and hinting at the potential for more hikes later this year, one might expect the gold market to continue to struggle," Nell Sloane, an analyst at, said in daily commentary.
On Wednesday, the Fed held overnight interest rates steady at 5.25% and left the door open for further increases if inflation does not come down. This was the second straight meeting with no change in monetary policy. It follows rate hikes at an unprecedented 17 consecutive policy-setting meetings.
Gold for December delivery was down $2.20 at $584 an ounce on the New York Mercantile Exchange. The contract, which gained $3 in Wednesday's regular session, touched a low of $582.50 earlier.
December silver futures shed 12 cents, or 1.1%, to trade at $11.02 an ounce.
Weakness in the U.S. dollar Thursday failed to provide much support for precious-metals prices. The dollar fell to one-week lows against the euro and Swiss franc and a two-week low against the British pound early Thursday on growing expectations the interest-rate differential between the U.S. and Europe will narrow this year.
You know it's not a good time for the precious metals when the dollar gets pounded and they still can't hold their heads above water," said Dale Doelling, chief market technician at Trends In Commodities.
But "it's always darkest before the dawn and, although it may be weeks before we see a bottom, I believe the markets will snap back in a big way and traders that get caught short when the reversal comes will get their heads lopped off if they aren't paying attention," he said.
"So I'll remain short for now, but look for a washout to signal that a bottom has been made," he said.
Meanwhile, "the energy complex is showing some signs of strength this morning and the comments at the U.N. over the last 48 hours would seem to turn up the geopolitical anxiety a bit," said Sloane. See Futures Movers.
But "one almost comes away from the U.N. developments this week with the understanding that the 'majority' of the U.N. is against any formal action toward Iran," she said. And, perhaps more importantly, "that a growing block at the U.N. will simply be against anything sponsored by the U.S."
"In short, a stalemate at the U.N. could be seen as a negative to gold," she said.
Other metals prices saw mixed trading.
Defying the weakness in gold, December copper was up 2.9 cents at $3.405 a pound and December palladium rose 65 cents to $307 an ounce, but October platinum fell $6 to $1,134, extending Wednesday's nearly $15 slide.
On the supply side, gold inventories were up 36,893 troy ounces at 8.02 million troy ounces as of late Wednesday, according to Nymex data. Silver supplies fell by 447,180 troy ounces to 105.1 million and copper supplies rose by 568 short tons to 18,091 short tons.
Indexes that track shares of metals and mining companies moved higher, rebounding after declines of around 5% in the past two sessions.