Gold eases decline as soaring-demand remarks rule over Fed woes
NEW YORK (Aug 22) Gold eased pace of its downfall on Thursday, swung between gains and losses and potentially headed towards more steady growth in the green territory, defeating downbeat tendencies spilled by Fed tapering expectations and listening to the beat of soaring demand from China and India instead.
Gold futures for December delivery ticked down a marginal 0.07% to $1,369,20 an ounce on New York's Comex as of the time of writing. Silver futures advanced 0.72% to $23.130.
Bucking this trend, the US dollar index, measuring the relative strength of the greenback against a basket of six major currencies, rose 0.37% to 81.512 at the same time. Precious metals usually react reversely to the index as they are seen as the best currency-hedge available.
Twilight zone
Still, gold has been a terrible performer this year, tumbling already roughly by 19% since January as some investors performed several waves of massive sale-offs after first speculations of US Federal Reserve (Fed) had emerged in the markets, scaring gold traders. The eerie of monetary stimulus scaling back have been haunting commodity investors ever since as they found themselves in a twilight zone, somewhere between golden era of 'easy money' blessing stocks and precious metals and sober reality without the helping hand of US central bank's printing machines.
This jittery period of time is likely to continue as even the Wedensday's Fed Open Market Committee (FOMC) minutes from July's meeting did not provide investors with a clearer timetable of the feared tapering plan, so uncertainty persists.
"First, almost all participants confirmed that they were broadly comfortable with the characterization of the contingent outlook for asset purchases that was presented in the June post meeting press conference and in the July monetary policy testimony. Under that outlook, if economic conditions improved broadly as expected, the Committee would moderate the pace of its securities purchases later this year," the document revealed on Wednesday.
However, on a downbeat note, Wednesday's news showed holdings in the SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, falling to 913.52 tonnes, having dropped to under 1,000 tonnes in June for the first time in over four years.
The Bank of America Corporation expected that bullion prices would average $1,495 an ounce in the fourth quarter, while JP Morgan projects rising averages in every quarter by the end of next year.
