Gold holds flat to weaker in Asia with Fed the key focus

© Reuters. Gold flat to weaker in Asia

Investing.com - Gold prices held flat to weaker in Asia on Wednesday with the focus on the Federal Reserve latest monetary review this month.

On the Comex division of the New York Mercantile Exchange, gold for December delivery traded nearly flat, down 0.04% to $1,177.00 a troy ounce.

Silver for December delivery fell 0.08% to $15.905 a troy ounce, while copper for December delivery eased 0.11% to $2.363 a pound.

Overnight, gold futures rallied on Tuesday amid a slightly weaker dollar, one session after tumbling nearly 1% following indications from China that the world's second-largest economy could expand this year at its lowest rate in more than a decade.

Metal traders continued to digest weak economic data from China on Monday when the National Bureau of Statistics reported that Chinese GDP grew by 6.9% in the third quarter, marking the slowest three-month period of growth since the height of the Financial Crisis. The soft reading intensifies concerns that China could end the year with annual growth below 7% for the first time in more than a decade. In August, China rattled global markets with a surprising decision to devalue the yuan as part of an initiative to stimulate its flagging economy.

It came on the heels of a report from the U.S. Department of Treasury that capital outflows from China exceeded $500 billion over the first eight months of the year, underscoring worries related to the long-term viability of the Chinese economy. Capital outflows peak when investors sell off their assets in a particular country because they no longer perceive it as a safe investment. By comparison, capital outflows in China hovered around $26 billion over the first six months of 2014, according to the U.S. Treasury.

China is the world's largest producer of gold and the second-largest consumer of the precious metal behind India.

Elsewhere, Federal Reserve chair Janet Yellen did not discuss the U.S. economy or monetary policy at a Department of Labor ceremony on Tuesday morning. Speaking at a ceremony honoring two former female commissioners of the Labor Department, Yellen accentuated the importance of providing the public with accurate economic data.

Over the last year, Yellen has continually reiterated that the Fed has taken a data driven approach with its decision on whether to raise short-term interest rates for the first time since 2006. While the Federal Open Market Committee is not expected to raise its benchmark Federal Funds Rate at a monetary policy meeting next week, it could lift the target rate above its current near-zero level at a meeting in December.

A rate hike is viewed as bearish for gold, which struggles to compete with high-yield bearing assets.