Gold falls 1pc as Fed tapering weighs
London, January 30, 2014
Gold fell around 1 percent on Thursday as the dollar rose after the US Federal Reserve pushed ahead with reducing its monetary stimulus and investors took profits made the previous session.
The Fed trimmed its monthly bond-buying programme by another $10 billion as it stuck to a plan to wind down its extraordinary economic stimulus, despite recent turmoil in emerging markets. It announced a similar cut in December.
"There is no surprise in the fact that tapering has continued," Mitsubishi analyst Jonathan Butler said.
"And barring any major change in the US macroeconomic situation, we are still of the view that by the end of the year we are likely to see tapering completely wound up or getting close to that, which is going to weigh on gold in the next few months."
Spot gold was down 1 percent to $1,255.20 an ounce by 1054 GMT, while US gold futures for February delivery were down $7.70 at $1,254.70 an ounce.
Prices gained nearly 1 percent on Wednesday, when analysts said the Fed's move to taper had already been fully discounted ahead of the announcement, while the central bank's failure to address economic uncertainty was also seen as potentially benefitting safe haven assets like gold.
But tapering is generally deemed negative for gold, which thrived when quantitative easing measures were introduced during the credit crunch years as ample central bank liquidity and a low interest rate environment encouraged investors to put money into non-interest-bearing assets.
Gold dropped 28 percent last year on an improving economy, and in anticipation of the Fed scaling back on its stimulus. - Reuters
More INTERNATIONAL NEWS Stories
- Malaysia formally asks for international help
- MASSACRE: Gunmen kill 100 in central Nigeria
- Tense Crimea votes on Russia referendum
- Libyan port rebels say ready for talks
- India puts on hold search for missing plane
- Alibaba plans US listing in third-quarter
- Lost airliner was diverted deliberately: Malaysian PM
- Saudi demands Qatar shut down Al Jazeera
- Labour stalwart Benn dies aged 88
- Bahrain boat show postponed over development work
- Korean steel maker Posco set for revamp
- Harsh winter hits US consumer sentiment
- Sanctions set as Russia presses on with Crimea takeover
- India inflation at nine-month low
- Missing plane: It's deliberate act says Malaysia PM
- Lost plane 'flown deliberately toward Andamans'
- Gold hits fresh six-month highs
- Iran not open for business, affirms Kerry
- Barclays 'to cut thousands of jobs'
- Jet sent 'pings' after going missing
- China premier warns on economic slowdown
- Gunmen fire on army bus in Cairo, 1 killed
- Lost jet 'may have flown for four hours'
- Gold up as Ukraine, China prompt safe-haven bids
- Search finds no sign of lost plane at suspect spot
- Missing jet may have strayed to Andaman
- Gold hits near 6-month high
- 2 killed in Manhattan building blast
- Cameron pushes for travel bans on Russian MPs
- Indian coastguards join Malaysia jet search