Fed Taper May Remove Fuel for Gold Rally

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Sept. 18 (Bloomberg) -- Bloomberg's Scarlet Fu and Elizabeth Campbell put futures in focus with a look at gold prices ahead of results from the Federal Reserve's two-day meeting in "On The Markets." They speak on Bloomberg Television's "In The Loop."

F markets are having a bit of a mixed reaction this morning before the fed announcement at 2:00 eastern.

Starting with the gold market.

Gold rises fell for the second straight day, reaching the lowest level in six weeks.

Analysts divided i how much to what scale the fed will scale back a monthly bond purchases.

Among 64 economists surveyed, 33 are expecting the fed to cut back monthly purchases by $5 billion or less, with 31 economists surveyed by bloomberg projecting the scale back in the monthly bond purchases by $10 billion or more.

I just wanted to go back or a minute.

If the consensus is the fed will slow down stimulus, what is the rationale for why that would drive gold down?

Gold reaction to the idea that the inflation fear would no longer be in the market.

I spoke to sterling smith, a futures specialist, and told me with quantitative easing slowing down, tapering, with the lowering of the monthly bond purchases thomas however you want to put it, that takes away the day six fuels of the gold rally, inflation.

At the very least, the fear of inflation.

That is why we see the decline in a second day in a row.

What about the other precious metals?

Silver fell to the lowest level since august.

We also sell platinum declined to the lowest level since july.

Following gold rationale for decline demand and outlook for slowing stimulus.

To what extent are we seeing other commodities?

At last check, oil prices were up.

It appears traders are trying to position themselves before this afternoon's announcement.

Right now individual fundamentals are coming into play.

Oil we had a louvered survey projecting a government report today will show inventory at the lowest level in a year.

So those are a bit higher right now.

Elizabeth campbell covering commodities in chicago for today's future in focus.

On the markets again in 30 minutes.

"market makers" is up next.


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