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Gold Declines Third Time in Four Days on Fed Taper Speculation

Gold futures declined for the third time in four days as U.S. economic data reinforced concern that the Federal Reserve will begin trimming stimulus measures, curbing demand for precious metals as a haven.

The U.S. expanded at 3.6 percent rate in the third quarter, up from an initial estimate of 2.8 percent, while jobless claims unexpectedly declined to the lowest level in more than two months as of Nov. 30, separate government reports showed today. Gold pared losses after the dollar declined, increasing demand for the precious metal as an alternative investment.

“The U.S. is on the right track, and tapering is clearly becoming a possibility,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates, said in a telephone interview from Chicago. “The dollar dropping is probably the only thing working for gold today.”

Gold futures for February delivery slid 1.2 percent to settle at $1,231.90 an ounce at 1:41 p.m. on the Comex in New York. Earlier, prices fell as much as 2.5 percent.

The dollar declined as much as 0.6 percent against the euro after the European Central Bank President Mario Draghi refrained from introducing further monetary stimulus.

Fed policy makers signaled last month that the labor market will probably improve enough to warrant slowing their $85 billion of monthly bond purchases. Bullion rose 70 percent from December 2008 to June 2011 as the central bank pumped more than $2 trillion into the financial system. The Fed next meets Dec. 17-18.

Gold has tumbled 26 percent this year, heading for the first annual drop in 13 years. Some investors lost faith in the precious metal as a store of value amid a rally in equities and as inflation remained low.

Silver futures for March delivery retreated 1.3 percent to $19.57 an ounce on Comex.

On the New York Mercantile Exchange, platinum futures for January delivery slipped 0.9 percent to $1,363.50 an ounce. Palladium futures for March delivery added 1 percent to $736.85 an ounce.

To contact the reporter on this story: Debarati Roy in New York at droy5@bloomberg.net

To contact the editor responsible for this story: Millie Munshi at mmunshi@bloomberg.net

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