Gold Gets Scared As Fed Meet Nears
NEW YORK (Sept 13) Gold futures seem to scared as the Fed’s September meeting comes near with the US central bank widely expected to begin the QE wind up.
The most awaited Fed meeting is due on Wednesday 18th September where, Bernanke may announce that tapering will start later in the year, or may announce the cut immediately as widely expected. A cut to US$75bn from US$85bn per month is the popular expectation.
Gold for December delivery is trading down $14.8 to $1,315.8 an ounce on the Comex division of the New York Mercantile Exchange. It tumbled $33.20, or 2.4%, to settle at $1,330.60 an ounce.
December silver futures which tumbled 4.4% in US trades yesterday declined further $0.259 drop to $21.89 an ounce today.
The further losses on Friday got help from a mildly higher U.S. dollar, with the ICE dollar index rising to 81.571, up from 81.513 late Thursday in North America.
The jobs report for August last week showed the economy added a less-than-expected 169,000 jobs,and revised lower the data for June and July. The Federal Reserve has said it would examine economic data closely in determining when and by how much to reduce monetary stimulus. The Fed’s two-day policy meeting is slated to end Wednesday.
Gold futures were also blown by the update from leading precious metals consultancy Thomson Reuters GFMS (Gold Fields Mineral Services). In an update to its Gold Survey 2013, Thomson Reuters GFMS said the market could beat a retreat below $1,300 towards the end of 2014 as US monetary stimulus is withdrawn, fuelling talk of rising interest rates. The consultancy expects prices to average $1,350 next year, down 7 per cent from $1,446 in 2013, with support seen between $1,200 and $1,250.
MCX October gold futures are trading down nearly Rs 300 after adding to its yesterday’s loss of nearly Rs 800 per 10 grams. MCX December silver futures tumbled below Rs 50000 mark and the contract was last seen trading at Rs 49919 per kg down more than Rs 500.
The data flow will also pick up next week in the US, with releases including industrial production, housing starts, sentiment and existing sales, the CPI, and the Empire State and Philly Fed manufacturing indices.
The Fed meeting will steal the spotlight but Europe will also be counting down to the German federal election on the Sunday. In this case the incumbent is expected to hang on, but were Merkel somehow to be toppled the eurozone would be thrown into disarray.
