BLBG:Gold Falls a 3rd Day to Six-Week Low Before Fed Statement
Gold fell for a third day to the lowest price in almost six weeks in London on speculation the U.S. Federal Reserve will slow stimulus. Silver reached a one-month low and platinum reached the lowest in two months.
The dollar was near the lowest level since August versus the euro before the U.S. central bank concludes a two-day meeting today when policy makers will decide whether to slow its $85 billion of monthly asset purchases. Gold reached $1,292.02 an ounce today, the lowest since Aug. 8.
Gold fell 22 percent this year as some investors lost faith in the metal as a store of value and on speculation the Fed will curb stimulus. Analysts are divided on the amount by which policy makers will scale back its monthly asset purchases today. Among 64 economists surveyed by Bloomberg News, 33 predict the Fed will reduce its buying of Treasuries by $5 billion or less, with 31 forecasting a cut of $10 billion or more.
“The market is looking for around $5 to $10 billion worth of tapering in one way, shape or form and if this is seen, I suspect gold will initially come off,” David Govett, head of precious metals at Marex Spectron Group in London, said today in an e-mail. “A large part of the market is already short in anticipation of this. If no taper is announced, gold will shoot straight back up.”
Gold for immediate delivery fell 0.6 percent to $1,302.16 by 9:49 a.m. in London, after falling as much as 1.4 percent. Bullion for December delivery lost 0.5 percent to $1,302.20 on the Comex in New York. Futures trading volume was 38 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg showed.
ETP Holdings
Holdings in gold-backed exchange-traded products fell 1.3 metric tons yesterday to 1,937.8 tons, the lowest since May 2010, data compiled by Bloomberg shows.
“The tapering really removes the upside case for gold,” Daniel Morgan, a Sydney-based commodity analyst at UBS AG, said on Bloomberg Television’s “First Up” with Mia Saini. “I don’t see any big reasons to be bullish on gold in the short term.”
Gold advanced as much as 21 percent from a 34-month low in June to $1,433.83 by the end of August as lower prices boosted demand for jewelry, bars and coins in Asia. India, last year’s biggest buyer, raised the import duty yesterday on jewelry to 15 percent from 10 percent. The government has sought to cut bullion imports to combat a record current-account deficit.
Silver for immediate delivery lost 0.4 percent to $21.6585 an ounce in London, after reaching $21.354 an ounce, the lowest since Aug. 14. Platinum was little changed at $1,423.35 an ounce, after falling to a two-month low of $1,411.68. Palladium slipped 0.7 percent to $699.48 an ounce.
“In the precious metals space, we prefer platinum and palladium because they’re geared to automotive demand and looking at economic data from around the world, that’s starting to look more bullish recently,” UBS’s Morgan said.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
