Gold adds to Tuesday's losses on taper bets
New York - (Jan 22) Gold futures added to Tuesday's losses, as the monetary policy of the Federal Reserve (Fed) still plays a key role on commodity markets. Probable further quantitative easing (QE) reduction impacts the greenback positively, providing a bearish pressure on the dollar-backed commodities.
Yellow metal futures were seen 0.21% lower during the early Wednesday session at $1,239.10 per troy ounce, as the US dollar gained against its major counterparts in connection with taper wagers.
Silver futures followed the trend and eased 0.23% to $19.825 an ounce, driven by the taper-driven sentiment. Morgan Stanley cut silver prices' estimates for 2014 to $19 and in 2015 even to $18.86.
Goldman Sachs expects gold prices to extend losses from the previous year as the asset-purchase program of the Fed is expected to be further reduced in 2014.
The US dollar index, indicating the relative strength of the greenback versus a basket of six of its major peers, inched up 0.06% to 81.150 points at the time of writing, remaining in the vicinity of a one-month high prior to the FOMC meeting.
FOMC eyed
The Fed's Federal Open Market Committee (FOMC) meets on January 28-29. In its last policy meeting in December, the US central bank decided to cut its historic bond-buying stimulus by $10 billion to $75 billion a month.
A further QE reduction could be announced at the upcoming meeting, some analysts suggested, as a lackluster December non-farm payrolls failed to hurt the central bank's expectations for solid US economic growth this year.
"We’re likely to continue on a path of gradual, measured reductions in the pace of purchases, assuming the economy tracks as we expect it to,” San Francisco Fed President John Williams said in an interview with the Wall Street Journal earlier in the month.
Philadelphia Fed President Charles Plosser supported the sentiment by adding to taper-concerns. "The December employment report has not changed my belief that the economy has already met the criteria of substantial improvement in labor market conditions. So my preference would be that we conclude the purchases sooner [than the end of 2014]," the head of Philadelphia's Fed said.
