RTRS:PRECIOUS-Gold reverses early gains, US stimulus outlook eyed
* Summers drops out of race for Fed chairman
* U.S. dollar falls to near 4-week low, Asian shares rally
* Fed policy meeting this week eyed for stimulus outlook
(Updates prices)
By A. Ananthalakshmi
SINGAPORE, Sept 16 (Reuters) - Gold slipped on Monday,
reversing early gains as growing conviction the U.S. Federal
Reserve would decide to roll back its stimulus from this month
dented the metal's appeal as a hedge against inflation.
The consensus is that the Fed will initially reduce its bond
purchases, now $85 billion a month, by $10 billion or perhaps
$15 billion and will announce the taper to its quantitative
easing (QE) after its Sept. 17-18 meeting.
Spot gold, which posted its steepest weekly drop in
more than two months last week, had slipped 0.1 percent to
$1,324.61 an ounce by 0650 GMT after hitting an intraday high of
$1,334.46. Silver fell nearly 2 percent.
News that former Treasury Secretary Lawrence Summers had
dropped out of the race to head the Fed boosted bullion prices
briefly as he is seen as more hawkish than the other main
contender Janet Yellen. Markets however do not expect this to
derail the near-term tapering process.
"Yellen is perceived to be more dovish than Summers," said
Barnabas Gan, an analyst at OCBC Bank in Singapore. "It seems
that there may be more resistance in faster tapering of the QE
program if Yellen becomes the chairman," Gan said.
Gold has plunged about 20 percent this year on tapering
fears, after twelve straight annual gains.
INVESTOR SENTIMENT BEARISH
Easing geopolitical tensions in Syria also hurt gold's
safe-haven appeal on Monday.
The United States agreed to call off military action against
Syria under a deal with Russia to remove President Bashar
al-Assad's chemical weapons stockpile.
Hedge funds and money managers slashed bullish bets in
futures and options of the U.S. gold markets for the first time
in 5 weeks, pressured by easing tensions over Syria and
expectations that the Fed will begin to unwind its monetary
stimulus, a weekly report by the Commodity Futures Trading
Commission showed on Friday.
SPDR Gold Trust, the world's largest gold-backed
exchange-traded fund, said its holdings fell 0.66 percent to
911.12 tonnes on Friday -- its biggest decline since Aug. 1.
