Fed rumors more gloom for goldGold retreated to the lowest level in three weeks, declining for a third day, on speculation that the Federal Reserve will start to reduce bond purchases by the end of the year as the U.S. economy improves. Platinum fell.
Bullion for immediate delivery lost as much as 0.8 percent to $1,273.55 an ounce, the lowest since July 17, and was at $1,277.72 at 11:35 a.m. in Singapore. Gold for December delivery fell as much as 0.8 percent to $1,272.50 an ounce on the Comex, the lowest for a most-active contract since July 17. Futures slumped a seventh day in the longest losing streak since mid-May.
Gold lost 24 percent this year amid speculation the Fed will wind down the quantitative-easing program. U.S. central bankers are scheduled to meet Sept. 17-18 to review the economy and assess policy.
“The market’s still fretting about what the Fed’s going to do with QE,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “We’re starting to see a crescendo of comments from officials.”
Gold rose 7.4 percent in July, the most since January 2012, after Fed Chairman Ben S. Bernanke said it’s too early to decide whether to pare asset buying next month. The Fed said last week that it would maintain the $85 billion program, while warning persistently low inflation could hamper the economic expansion.
Fed Bank of Dallas President Richard Fisher, a critic of quantitative easing, said on Aug. 5 that the central bank is closer to slowing the pace of monetary stimulus. Half of the 54 economists in a Bloomberg survey last month expect the Fed to trim bond purchases at its Sept. 17-18 meeting.
Holdings in the SPDR Gold Trust, the biggest exchange-traded product backed by gold, fell to 915.04 metric tons yesterday, the lowest since February 2009, according to data on the fund’s Web site. Assets have shrunk 435.78 tons this year.
Silver for immediate delivery dropped as much as 0.8 percent to $19.3715 an ounce and was at $19.433. Platinum fell as much as 0.8 percent to $1,416.50 an ounce and traded at $1,423.50. Palladium was little changed at $722 an ounce.