Gold Trades Steady After Three-Day Decline on Tapering Concerns

San Francisco (Jan 9)   Gold, which fell for three straight days, traded steady after U.S. applications for unemployment benefits fell to the lowest in a month, signaling an improving economy and lower demand for bullion as a store of value.

Jobless claims declined by 15,000 to 330,000 in the week ended Jan. 4, the Labor Department reported today. Minutes of the Federal Reserve’s December meeting released yesterday showed some officials saw diminishing economic benefits from purchasing debt. Bullion tumbled 28 percent last year, the most since 1981, after some investors lost faith in the precious metal as U.S. growth rebounded.

“People are seeing very little need for gold,” Frank McGhee, the head dealer at Integrated Brokerage Services in Chicago, said in a telephone interview. “The economy continues to show signs of improvement.”

Gold futures for February delivery added less than 0.1 percent to $1,226 an ounce at 11:14 a.m. on the Comex in New York. The precious metal fell 1.1 percent in the past three sessions.

Signs of increased physical demand for bullion helped stem the metal’s declines, McGhee said.

The U.K.’s Royal Mint said it ran out of 2014 Sovereign gold coins as lower prices spurred demand.

“Demand for gold coins and bars was very strong last year on account of the falling prices, a trend which appears to be continuing at the start of the year,” Commerzbank AG wrote today in a report. Investor sales though gold-backed funds are continuing to pressure prices, the bank said.

Bank of America Corp. cuts its average gold forecast for this year by 11 percent to $1,150, partly because inflation has failed to accelerate, it said in a report today. The bank reduced its 2014 silver estimates by 21 percent to $18.38 an ounce.

Silver futures for March delivery fell 0.3 percent to $19.475 an ounce in New York.