BLBG:Gold Falls Before Fed Meets as Investors Weigh Stimulus Outlook
Gold declined in London before the U.S. Federal Reserve starts a two-day meeting as investors weighed when the central bank will taper asset purchases.
The Federal Open Market Committee starts its two-day policy meeting tomorrow. Fed Chairman Ben S. Bernanke said last month the central bank, which is buying $85 billion of Treasuries and mortgage securities a month to spur the economy, could pare quantitative easing if the U.S. economy improves sustainably. The dollar was little changed versus six major currencies after falling to the lowest level since February last week.
“The Fed’s monthly FOMC meeting will be closely watched for any signs of QE tapering,” Jonathan Butler, a precious metals strategist at Mitsubishi Corp. (8058) International (Europe) Plc in London, wrote in a report today. That “would be bearish for gold and the other precious metals.”
Gold for immediate delivery fell 0.3 percent to $1,386.54 an ounce by 9:51 a.m. in London. Prices gained 0.6 percent last week. Bullion for August delivery lost 0.1 percent to $1,386.60 on the Comex in New York. Futures trading volume was 57 percent below the average in the past 100 days for this time of day, according to data compiled by Bloomberg.
Holdings in exchange-traded products fell 1.1 metric tons to 2,116.8 tons on June 14, the lowest since March 2011, according to data compiled by Bloomberg. Assets declined the past 18 weeks, the worst run since the first product was listed in 2003.
U.S. Economy
Prices slid 17 percent this year as an improving U.S. economy increased speculation the Fed may taper quantitative-easing measures that helped bullion cap a 12-year bull run in 2012. Newcrest Mining Ltd. (NCM), Australia’s largest gold producer, said this month it will write down the value of its assets by as much as A$6 billion ($5.8 billion) after the slump in prices.
“The market is unlikely to make any big moves before the Fed meeting as investors look for the next clue with regards to policy makers’ take on stimulus,” said Sun Yonggang, a macroeconomic strategist at Everbright Futures Co., a unit of one of China’s largest state-owned investment companies.
Silver for immediate delivery fell 0.5 percent to $21.9713 an ounce in London. Platinum rose 0.2 percent to $1,448.75 an ounce. Palladium was little changed at $731.23 an ounce.
To contact the reporter 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
