Gold Prices Melt; Stock Market Rises On Fiscal Hopes


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Gold and silver prices lost luster along with the dollar as investors pushed up stocks on hopes that the Federal Reserve Open Market Committee will announce more economic stimulus after its two-day policy meeting Wednesday.

Spot gold prices fell 0.25% to $1,709.30 an ounce.

SPDR Gold Shares ( GLD ), tracking a 10th of an ounce of bullion, shed 0.21% to 165.46. GLD is consolidating below its 50-day moving average while holding above its longer-term 200-day average, which means it's in a weak uptrend.

Silver prices plunged 1.08% to 33.01 an ounce.

IShares Silver Trust ( SLV ) dropped 0.93% to 31.84. It's struggling to stay above its 50-day line while trading high above its 200-day line, reflecting an uptrend.

Kitco attributed the weakness in precious metals to traders liquidating positions ahead of the Federal Open Market Committee's announcement Wednesday after a two-day policy meeting. The market expects the Federal Reserve to undergo more quantitative easing via a new bond buying program, to support the economy. That would be bearish for the dollar and bullish for gold and silver. But the precious metals may have already priced in those sentiments, Jim Wyckoff of Kitco wrote.

PowerShares DB U.S. Dollar Index Bullish ( UUP ), measuring the greenback against a basket of major foreign currencies, gave back 0.30% to 21.90. The dollar lost ground against the euro on news that German investor optimism rose more than expected this month. UUP is trading below both its 50- and 200-day moving averages, indicating a very strong downtrend.

CurrencyShares Euro Trust ( FXE ) rose 0.57% to 129.07. It's trading above its 50- and 200-day lines.

In afternoon trade, theSPDR S&P 500 ( SPY ) was ahead 0.65% to 143.40. It was up as much as 0.9% intraday but pulled back after Senate Majority Leader Harry Reid said a compromise over the fiscal cliff would be unlikely before Christmas.

"While a fiscal cliff deal is still possible, the odds of going over the cliff appear to be higher than what markets are discounting, suggesting the potential for heightened downside risk," Russ Koesterich, managing director and global chief investment at Blackrock wrote in a commentary. "Second, even if a deal is reached, it will likely be a relatively small, stopgap sort of agreement, which would likely still have a negative impact on economic growth. Third, given how contentious the debate has been so far, the odds of some sort of comprehensive 'grand bargain' in 2013 seem to be waning.

Follow Trang Ho on Twitter @TrangHoETFs .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , ETFs
More Headlines for: FXE , GLD , SLV , SPY , UUP

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