Gold Falls Below $1,300 on Bets Fed Will Reduce Stimulus
NEW YORK (Sept 18) Gold futures fell to the lowest in almost six weeks beneath $1,300 an ounce on speculation that the Federal Reserve will scale back U.S. fiscal stimulus, crimping demand for the precious metal as a store of value.
The Fed concludes a two-day meeting today, and policy makers will decide whether to reduce $85 billion of monthly asset purchases amid signs of economic gains. Gold touched $1,291.50, the lowest since Aug. 8.
“It’s a monumental decision as it will tell the world that the Fed sees the economy doing well,” David Morgan, a precious-metals consultant, said in a telephone interview from Spokane, Washington. “Gold will continue to trade weak.”
Gold futures for December delivery dropped 0.9 percent to $1,297.70 at 10:51 a.m. on the Comex in New York. Through yesterday, the price fell 22 percent this year amid low U.S. inflation and an equity rally.
Analysts are divided on the amount by which policy makers will scale back asset purchases. Among 64 economists surveyed by Bloomberg News, 33 predict the Fed will reduce buying of Treasuries by $5 billion or less, with 31 forecasting a cut of $10 billion or more.
Gold probably will trend lower, Lloyd C. Blankfein, the chief executive officer of Goldman Sachs Group Inc., said today in an interview with CNBC.
Yesterday, holdings in exchange-traded products backed by gold fell 1.3 metric tons to 1,937.8 tons, the lowest since May 2010, data compiled by Bloomberg shows.
Silver futures for December delivery dropped 1.6 percent to $21.445 an ounce on the Comex. Earlier, the price touched $21.37, the lowest for a most-active contract since Aug. 14. Through yesterday, the metal tumbled 28 percent this year.
