Gold Prices Drop After Fed Reduces Bond-Buying ProgramDebarati Roy
Gold prices fell after the Federal Reserve pared its monthly bond-buying program and said the economy is gaining momentum.
The central bank cut monthly asset buying to $45 billion, its fourth straight $10 billion cut, and said further reductions in “measured steps” are likely. Gold slumped 28 percent in 2013, the most since 1981, partly on concern that the Fed would slow the pace of monetary stimulus.
Through yesterday, prices climbed 7.8 percent this year amid signs that the U.S. economy was faltering, while tensions between Ukraine and Russia escalated. The metal pared losses of as much as 0.8 percent today after a report showed American growth stalled in the first quarter.
“It is clear that they want to continue on the tapering course, and some gold investors want out,” Michael Gayed, the chief investment strategist at Pension Partners LLC, said in a telephone interview.
Gold for immediate delivery dropped 0.5 percent to $1,289.86 an ounce at 2:17 p.m. New York time. Prices fell 0.6 percent in the previous two sessions.
Gross domestic product grew at a 0.1 percent annualized rate in the first quarter, compared with a 2.6 percent gain in the previous quarter, government data showed today.
On the Comex in New York, gold futures for June delivery slid less than 0.1 percent to settle at $1,295.90.
Bullion jumped 70 percent from December 2008 to June 2011 as the Fed bought debt and cut interest rates to a record in a bid to boost the economy.