New York - Gold dropped as US Federal Reserve policy-makers were set to start a two-day meeting amid speculation that the central bank may begin to taper its unprecedented stimulus programme in the coming months.
Bullion for immediate delivery fell as much as 0.7 percent to $1,318.26 an ounce, and traded at $1,320.78 an ounce at 3.46pm in Singapore. Prices gained for the past three weeks and are up 7 percent this month, the most since January 2012.
Gold lost 21 percent this year and Goldman Sachs Group forecasts lower prices through the end of 2014 on concern that an improving US economy will prompt the Fed to curb stimulus. Some investors lost faith in the metal as a protector of wealth amid a rally in the dollar and stock markets.
“Bullion has been put under significant pressure from uncertainty surrounding the timing of quantitative-easing tapering since the start of this year,” James Steel, an analyst at HSBC Securities (USA), wrote in a note. “Investors take a wait-and-see approach ahead of the two-day FOMC meeting,” he wrote, referring to the Federal Open Market Committee.
While Fed Chairman Ben Bernanke is forecast to maintain stimulus at this month’s meeting, he will trim the bond buying in September to $65 billion a month from $85 billion, according to a growing number of economists surveyed by Bloomberg. The Bloomberg US Dollar Index gained 4 percent this year as the MSCI All-Country World Index of equities increased 9.8 percent.
Gold for December delivery lost 0.7 percent at $1,320.70 an ounce on the Comex in New York. As the US economy improves, futures will drop to $1,050 by the end of next year, Goldman analysts led by Jeffrey Currie wrote in a July 22 report.
Bullion held in exchange-traded products was little changed at 1,969.92 metric tons as of Monday, from 1,969.87 tons on July 26, according to data compiled by Bloomberg. The assets have slumped 25 percent this year.
Silver for immediate delivery dropped as much as 1.6 percent to $19.5476 an ounce and traded at $19.636. Platinum lost as much as 0.8 percent to $1,430.30 an ounce, and was $1,432.50. Palladium declined 0.9 percent at $736.90 an ounce. - Bloomberg
* If you use Gmail to read IOL's newsletters, note that Google is rolling out a new tabbed inbox that filters your mail into 5 separate tabs - Primary, Social, Promotions, Updates and Forums. IOL emails will probably be sent to the “Promotions” tab instead of the “Primary” tab. If you don't want it that way, drag the newsletter from the Promotions tab to the Primary tab. An alert will pop up. Click “yes” and your newsletters will continue to go to your Primary inbox.