Wall Street and Gold Mixed and Uncertain

Wall Street ended little changed on Monday as investors weighed the outlook for the economy and its implications for Federal Reserve policy. Dow Jones and S&P 500 both lost less than 0.1%. Nasdaq added 0.1%. After climbing steadily for the first part of the year, stocks have been choppy in recent weeks as investors attempt to gauge when the Fed will begin to slow the pace of its bond buying program. The upcoming FOMC meeting is the main market focus now that the Bank of Japan has held rates and policy following the Bank of England and the European Central Bank decisions last week.

The concerns eased Friday after the Labor Department said hiring continued in May at a cautious pace, while the unemployment rate edged up. The Fed has said it could begin to withdraw monetary stimulus when it sees meaningful improvement in unemployment. European stock markets ended Monday’s session with mixed results as investors digested a raft of economic data from the U.S. to Europe and China. The DAX climbed by 0.64 percent and FTSE 100 gained 1%. CAC 40 fell by 0.2%.

The FOMC meeting is outweighing fundamental data as traders are more concerned with easy money policies and their effect on currencies values. Every data release is judged on its effect on the Fed decision regardless of that it says about the economic situation. This leaves gold stuck in a range trading between the low 1400’s and the above the 1380 price level a $20 range. Gold prices were slightly up after a Fed official said that low US inflation can prompt the Fed to continue with its aggressive bond buying program. However the upside was limited as S&P removed the near term threat of another credit rating downgrade for the U.S. by revising its outlook to stable from negative, citing an improved economic and fiscal outlook.

Holdings in SPDR Gold Trust, the world’s largest gold backed exchange-traded fund’s holdings rose 0.27 percent to 1009.85 tonnes on Monday from 1007.1 tonnes on Friday. Gold prices internationally are expected to move down as the improving US economy and credit rating upgrade can hurt gold’s safe haven appeal.

Gold futures closed a choppy trading session in positive territory, after struggling for direction against a backdrop of uncertainty over the prospects for Federal Reserve’s decision to scale back its asset-buying program. Gold is trading in the red this morning at 1384.65

Bullion tumbled 17 percent this year as an improving U.S. economy increased speculation the central bank may scale back its bond buying program. Fed policy makers will trim the monthly purchases to $65 billion at their October meeting from the current level of $85 billion. Prices are now 28 percent below the $1,921.15 record set in September 2011 and investors are holding the least metal through exchange-traded products in more than two years.