By Phoebe Sedgman - Aug 6, 2013 8:53 AM GMT+0400
Gold fell for a second day as investors weighed when the U.S. Federal Reserve will slow the pace of bond purchases and as holdings in the biggest bullion-backed exchange-traded product extended their decline.
Bullion for immediate delivery dropped as much as 1 percent to $1,289.82 an ounce and traded at $1,292.40 at 12:47 p.m. in Singapore. Gold for December delivery lost 0.8 percent to $1,291.70 on the Comex in New York, a sixth straight loss and longest losing streak since May.
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 7.4 percent in July, the first such 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.
The price of “$1,300 is a key technical level so I’m not surprised to see some stops there,” Victor Thianpiriya, an analyst atAustralia & New Zealand Banking Group Ltd. (ANZ), said by phone from Singapore today referring to stop-loss orders. “It’s whether the market believes that the Fed can actually achieve what they want to achieve.”
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.
“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, Fisher said in a speech in Portland, Oregon. “Some have come to expect the Fed to keep the markets levitating indefinitely. This distorts the pricing of financial assets” and can lead to “serious misallocation of capital.”
Holdings in the SPDR Gold Trust, the biggest bullion-backed exchange-traded product, 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 immediate delivery fell 0.4 percent to $19.6305 an ounce. Platinum declined 0.8 percent to $1,440.35 an ounce and palladium dropped 0.7 percent to $727.65 an ounce.
To contact the reporter for this story: Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net