Gold Drops From Two-Month High on Concern Fed May Slow StimulusDebarati Roy
Gold declined from a two-month high in New York amid concern that the Federal Reserve will slow the pace of stimulus, crimping demand for the precious metal as a store of value.
The central bank, which has kept interest rates at a record-low since 2008, probably will reduce monetary stimulus of $85 billion in monthly bond purchases in September after gains in the economy, according to 65 percent of economists surveyed by Bloomberg. The minutes of the previous Federal Open Market Committee meeting will be released on Aug. 21.
“The market is speculating that the Fed will announce the beginning of the tapering,” Frank Lesh, a trader at FuturePath Trading in Chicago, said in a telephone interview. “We are seeing investors tread with more caution.”
Gold futures for December delivery slid 0.4 percent to settle at $1,365.70 an ounce at 1:50 p.m. on the Comex in New York. Earlier, prices reached $1,384.10, the highest for a most-active contract since June 18.
Trading on the Comex was 31 percent below the average for the past 100 days for this time of day, according to data compiled by Bloomberg.
Gold has tumbled 19 percent this year as some investors lost faith in the metal as a store of value, wiping $56.1 billion from the value of bullion-backed exchange-traded products. Lower prices spurred purchases of jewelry and coins, helping the metal head for a second straight monthly gain.
The precious metal jumped 70 percent from the end of December 2008 to June 2011 as the Fed bought more than $2 trillion in bonds to bolster the economy.
Silver futures for December delivery fell 0.7 percent to $23.215 an ounce, after touching $23.64, the highest since May 14. It advanced 15 percent last week, the most since September 2008.
On the New York Mercantile Exchange, platinum futures for October delivery declined 1.2 percent to $1,509 an ounce. Palladium futures for September delivery slumped 1.3 percent to $752.90 an ounce, the biggest drop since Aug. 6