Metal drops below key $1,300 level after Dallas Fed President Fisher suggests QE end in sight.
Gold fell for a sixth day in New York, trading below $1,300 an ounce, as investors weighed when the U.S. Federal Reserve will slow the pace of bond purchases.
Federal Reserve Bank of Dallas President Richard Fisher, one of the most vocal critics of quantitative easing, said yesterday the central bank is closer to slowing bond purchases. Gold rose 7.3 percent in July, the first gain since March, after Fed Chairman Ben S. Bernanke said that it’s too early to decide whether to begin paring asset purchases in September.
“Bullion was weighed down by comments from Dallas Federal Reserve President Richard Fisher,” James Steel, an analyst at HSBC Securities (USA) Inc., said in an e-mailed note today. The speech showed the Fed “is now a step closer to withdrawing from its quantitative easing program.”
Gold for December delivery dropped 1.1 percent to $1,288.20 at 7:50 a.m. on the Comex in New York, a sixth straight loss and the longest losing streak since May. Gold for immediate delivery fell 1 percent to $1,289.56 an ounce in London, extending yesterday’s 0.7 percent loss.
Gold tumbled 23 percent this year amid speculation the Fed may taper its stimulus program that helped bullion cap a 12-year bull run in 2012. The Fed said last week it would maintain its $85 billion monthly bond-buying program while warning that persistently low inflation could hamper the economic expansion.
Fisher said in a speech in Portland, Oregon, yesterday that a decision to slow purchases is “closer to execution mode,” and that “financial markets may have become too accustomed to what some have depicted as a Fed ‘put,’” or the idea that the central bank will loosen credit after a market decline.
Gold also fell as holdings in the biggest bullion-backed exchange-traded product extended their slide. Holdings in the SPDR Gold Trust declined 0.2 percent to 917.14 metric tons yesterday, the lowest since February 2009, according to data on the fund’s website.
Silver for September delivery fell 0.3 percent to $19.655 an ounce in New York. Platinum for October delivery declined 0.6 percent to $1,439.20 an ounce and palladium for September delivery dropped 1.1 percent to $727.40 an ounce.
(Bloomberg News)
