Gold Haunted On Demand Worries, Fed Meet Keenly Eyed

New York (Dec 12)  Gold slipped heavily in afternoon today, giving up after recent gains as profit selling hurt the yellow metal. COMEX Gold eased from a three week high as traders eyed next week's Federal Reserve policy decision. Gold had soared nearly 27 dollars on Tuesday amid weak US dollar and ideas of continued firm Gold demand from China. However, these gains failed to extend further and falling stocks around the world pulled Gold lower too. COMEX Gold quotes at $1237 per ounce right now, down $20 per ounce on the day. MCX Gold is quoting at Rs 29264, down around Rs 200 per 10 grams on the day.

The Federal Reserve may begin to scale back its 85-billion-USD monthly asset purchases at the committee's policy meeting on December 17th-18th rather than wait next year. Earlier this week, Fed Reserve Bank of Atlanta President Dennis Lockhart said that any decision to taper should be accompanied by a limit on the size of the program or a timetable for ending it.

Investment demand for Gold remains a dud. Assets in the SPDR Gold Trust, the biggest bullion-backed ETF, remains around the lowest since January 2009. Outflows have totaled nearly 470 tons this year. Indian gold imports are likely to see a fall of around 25-30% next year given the dramatic increase in import duties and the massive drop in the Indian Rupee this year. 

Total global Gold demand fell 21% in the third quarter as outflows from physical bullion funds and a drop in buying from major consumer India offset firmer jewellery, coin and bar sales, an industry report showed last month. Gold consumption fell to 868.5 tonnes in the last quarter, a four-year low, from 1,101.4 tonnes in the same period of the previous year, according to the World Gold Council's latest Gold Demand Trends report.