Gold Drops Below $1,200 an Ounce for First Time Since June
Gold fell below $1,200 an ounce in London and New York for the first time since June as an improving U.S. economy prompted the Federal Reserve to cut stimulus and reduced demand for precious metals as alternative assets.
Bullion declined as much as 1.5 percent to $1,199.63 an ounce in London trading, the lowest since June 28. Bullion for February delivery fell as much 3 percent to $1,198 on the Comex in New York on trading volume that was double the average for the past 100 days for this time of day, according to data compiled by Bloomberg. Prices are down 28 percent this year, heading for the first annual drop in 13 years.
The Fed said yesterday it will cut monthly bond purchases to $75 billion from $85 billion, citing an improved outlook for the U.S. employment market ahead of jobless-claims data today.
Prices tumbled as much as 38 percent in London since reaching a record in September 2011 as the U.S. economic recovery gained momentum. Global equities have advanced to the highest in almost six years, and U.S. inflation is running at 1.2 percent.
Gold rose 70 percent from December 2008 to June 2011 as the Fed expanded its balance sheet through debt purchases, fueling expectations of accelerated inflation and a weaker dollar. Investor appetite for the precious metal waned this year as inflation failed to accelerate and the S&P 500 Index of shares reached all-time highs.
Gold was 1 percent lower at $1,205.71 an ounce in London trading by 9:01 a.m. Silver for immediate delivery fell 2.2 percent to $19.3055 an ounce. In New York, gold futures were 2.6 percent lower at $1,203.40 an ounce.
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