Gold Retreats a Second Day in London Before Fed Policy Meeting
LONDON (June 18) Gold fell for a second day in London before the U.S. Federal Reserve starts a policy meeting as investors weighed when the central bank will taper stimulus. Palladium declined to a five-week low.
The U.S. central bank, which begins a two-day meeting today, currently buys $85 billion a month of Treasury and mortgage debt. Fed Chairman Ben S. Bernanke said last month the pace of monthly purchases could be reduced if the employment outlook shows sustained improvement. Data due today may show U.S. housing starts rose in May, economists said.
“The atmosphere is clearly difficult for gold at the moment, and downside risks loom,” Joni Teves, an analyst at UBS AG in London, wrote today in a report. “It will either have to take a materially dovish statement and/or a significant scaling back in the Fed’s economic projections for greater upside prospects to emerge.”
Gold for immediate delivery fell 0.5 percent to $1,378.40 an ounce by 11:11 a.m. in London. Bullion for August delivery lost 0.4 percent to $1,377.50 on the Comex in New York. Futures trading volume was 42 percent below the average in the past 100 days for this time of day, according to data compiled by Bloomberg.
Bullion at the morning “fixing,” used by some mining companies to sell output, was at $1,378.50 in London, down from $1,384.75 yesterday afternoon.
Holdings in exchange-traded products fell 0.6 metric ton to 2,116.2 tons yesterday, the lowest since March 2011, according to data compiled by Bloomberg. Assets are down 20 percent in 2013 after climbing every year since the first product was listed in 2003.
Prices slid 18 percent this year as an improving U.S. economy increased speculation the Fed may taper quantitative-easing measures that helped bullion cap a 12-year bull run in 2012. Newcrest Mining Ltd. (NCM), Australia’s largest gold producer, said this month it will write down the value of its assets by as much as A$6 billion ($5.7 billion) after the slump in prices.
In India, last year’s biggest gold buyer, Economic Affairs Secretary Arvind Mayaram said the nation could implement more measures to curb imports after raising a tax on inbound shipments this month. The increased duty has caused a shortage among jewelers in the country, according to the All India Gems & Jewellery Trade Association.
Silver for immediate delivery fell 0.3 percent to $21.82 an ounce in London. Platinum lost 0.1 percent to $1,432.93 an ounce, after falling to $1,425.98, the lowest since April 24. Palladium was down 1.5 percent at $703.63 an ounce. It reached $697.20, the lowest since May 10.
Platinum and palladium are mostly used in pollution-control devices in vehicles. European car sales fell to a 20-year low in May as rising joblessness caused by a recession in the euro region reduced demand, the Brussels-based European Automobile Manufacturers’ Association said today.