Gold Near Two-Week Low as Investors Weigh Global Stimulus CurbsPhoebe Sedgman
Gold traded near the lowest price in more than two weeks on speculation central banks will refrain from adding more stimulus to bolster global growth.
Bullion for immediate delivery dropped 0.3 percent to $1,374.81 an ounce at 2:02 p.m. in Singapore. Prices touched $1,366.19 yesterday, the lowest since May 23. Gold for August delivery lost 0.2 percent to $1,374.20 an ounce on the Comex.
The Bank of Japan yesterday held back from expanding its tools to rekindle inflation and stoke growth, sticking with an April pledge to increase the monetary base by 60 trillion yen to 70 trillion yen a year. Federal Reserve Chairman Ben S. Bernanke said last month that the central bank could rein in its $85 billion monthly bond purchases if the U.S. employment outlook showed a sustainable improvement.
“It’s the expectations of QE having a limited time horizon,” said David Lennox, an analyst at Fat Prophets in Sydney, referring to quantitative easing. “The market is fixated on the Fed.”
The U.S. central bank will reduce its purchases to $65 billion a month at its October meeting, according to the median estimate in a Bloomberg survey of economists last week. Gold is down 18 percent this year as some investors lost faith in the precious metal as a store of value, potentially ending a 12-year bull run.
Gold will continue to decline over the medium-term on a re-acceleration in U.S. growth and a further unwind of exchange-traded fund positions, Goldman Sachs Group Inc. said in a report today. The bank maintained its neutral recommendation on commodity prices, with a 12-month forecast of $1,345 an ounce for gold futures traded in New York.
Holdings in exchange-traded products have lost 19 percent this year, reaching 2,127.5 metric tons yesterday, the lowest since April 2011, according to data compiled by Bloomberg.
Silver for immediate delivery was little changed at $21.6975 an ounce. Spot platinum rose 0.4 percent to $1,485.30 an ounce, while palladium was little changed at $752.95 an ounce.