Gold and silver futures posted the biggest weekly drops since June on speculation that the Federal Reserve will cut fiscal stimulus next week, while talks started on a plan for Syria to surrender its chemical weapons.
The Fed will decide to cut monthly purchases of Treasuries to $35 billion from $45 billion and keep mortgage-bond buying at $40 billion at its meeting starting Sept. 17, a Bloomberg survey showed. Gold reached a three-month high on Aug. 28 on concern that the U.S. would attack Syria.
“The market has been fixated on what the central bank will announce at the conclusion of their meeting,” Peter Hug, the global trading director of Kitco Metals Inc., in Montreal, said in a report. “The perceived decreasing odds of U.S. military action against the Syrian regime continue to pressure safe-haven gold.”
Gold futures for December delivery fell 1.7 percent to settle at $1,308.60 at 1:56 p.m. on the Comex in New York. Earlier, the price touched $1,304.60, the lowest for a most-active contract since Aug. 9. This week, the metal dropped 5.6 percent, the biggest decline since June 21.
The price has fallen 22 percent this year as some investors lost faith in the metal as a store of value amid a U.S. equity rally and low inflation. Gold rose 70 percent from December 2008 to June 2011 as the Fed pumped more than $2 trillion into the financial system by purchasing debt.
Futures are poised to extend declines as the Fed reduces stimulus and the economy gains, according to Goldman Sachs Group Inc. The metal may drop below $1,000, beneath the bank’s 2014 target of $1,050, Jeffrey Currie, the head of commodities research, said today in a Bloomberg Television interview.
Silver futures for December delivery fell 1.9 percent to $21.72 an ounce on the Comex. Earlier, the price touched $21.42, the lowest since Aug. 14. This week, the price tumbled 9.1 percent, the most since June 21.
On the New York Mercantile Exchange, platinum futures for October delivery gained 0.1 percent to $1,444.50 an ounce. This week, the price dropped 3.4 percent, the most since June 21.
Palladium futures for December delivery rose 0.9 percent to $699.10 an ounce. The metal climbed 0.3 percent this week.
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