Gold Seen Extending Slump as Fed Tapering Forecast to Cut Demand

Gold may slump 14 percent next year on speculation the Federal Reserve will curb stimulus measures in the U.S., reducing demand for the metal as an investment asset, according to an Australian government forecaster.

Prices may average $1,220 an ounce in 2014 from about $1,413 this year, the Canberra-based Bureau of Resources and Energy Economics said in a report today. That compares with a September forecast for $1,275 in 2014.

The Fed will decide whether to maintain or reduce its $85 billion monthly bond-buying program at the end of a two-day meeting today. Gold tumbled 26 percent this year on speculation the central bank will curb stimulus as economic growth picked up. While about 34 percent of economists surveyed by Bloomberg on Dec. 6 predicted that the Fed will cut purchases this week, 40 percent forecast that tapering will start in March.

Global mine production may increase to 3,010 metric tons in 2014 from 2,935 tons this year, the bureau said. Fabrication demand may rise 3.2 percent to 3,032 tons next year, it said.

Production in Australia may decline about 3 percent to 247 tons in the year started July 1, the report showed. Exports may reach 270 tons from 280 tons a year earlier, it said.

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