Gold gained in London before the U.S. Federal Reserve’s decision on a possible cut in stimulus. Platinum and palladium also advanced.
Gold tumbled 26 percent this year, heading for its first annual loss since 2000, amid speculation the Fed will start curbing its $85 billion in monthly bond buying. Officials may reduce the purchases “in coming months” as the economy improves, they said at their Oct. 29-30 meeting. While about 34 percent of economists surveyed by Bloomberg on Dec. 6 predicted the Fed will cut purchases this week, 40 percent forecast that tapering will start in March.
“The Fed is the big one this week,” Victor Thianpiriya, an analyst at Australia & New Zealand Banking Group Ltd., said by phone from Singapore today. “The market seems pretty split between whether they’ll start tapering in December, January or March. That’s keeping gold investors on their toes.”
Bullion for immediate delivery gained 0.5 percent to $1,236.62 an ounce by 8:23 a.m. in London after falling 0.8 percent yesterday. Gold for February delivery rose 0.4 percent to $1,235.50 an ounce on the Comex in New York on trading volumes that were 29 percent lower than the average for the past 100 days for this time of day.
Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., sees about a 60 percent chance that the Fed will announce a stimulus reduction today, according to an interview with Betty Liu and Cory Johnson on Bloomberg Television’s “In the Loop.” Gold rose 70 percent from December 2008 to June 2011 as the Fed pumped more than $2 trillion into the financial system.
Silver was 0.5 percent higher at $19.9971 an ounce, platinum advanced 0.6 percent to $1,357.49 an ounce and palladium climbed 1.3 percent to $706.92 an ounce.
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