By Nicholas Larkin & Glenys Sim - Aug 21, 2013 1:59 AM PT
Gold declined in London before the U.S. Federal Reserve releases minutes from its last meeting that may signal when policy makers plan to slow stimulus.
Bullion reached a two-month high of $1,384.55 an ounce on Aug. 19. The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 major currencies, rose before minutes of the Federal Open Market Committee’s July 30-31 meeting due today.
Gold slid 19 percent this year as some investors lost faith in the metal as a store of value and on speculation that the Fed may cut the $85 billion in monthly asset purchases that helped bullion cap a 12-year bull run last year. Bullion advanced 15 percent since reaching a 34-month low in June as lower prices boosted demand for jewelry to coins and bars.
“It will be harder to sustain physical demand at higher prices with bargain hunting clearly running out of steam,” Andrey Kryuchenkov, a commodity strategist in London at VTB Capital, wrote in a report. “Attention will turn to the FOMC’s July meeting minutes. Any hawkish comments could see small-scale profit taking in gold.”
Gold for immediate delivery fell 0.6 percent to $1,363.29 an ounce by 9:37 a.m. in London. Bullion for December delivery was down 0.7 percent at $1,362.60 on the Comex in New York. Futures trading volume was 29 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed.
Central Bank
Fed policy makers next gather on Sept. 17-18 and will probably decide to reduce the program at that meeting, according to 65 percent of economists surveyed by Bloomberg News from Aug. 9-13. Gold jumped 70 percent from the end of December 2008 to June 2011 as the central bank bought more than $2 trillion in bonds to bolster the economy.
Gold exchange-traded product holdings rose 1.5 metric tons to 1,949.2 tons yesterday, data compiled by Bloomberg show. Assets are down 26 percent this year.
Silver for immediate delivery fell 0.6 percent to $22.8661 an ounce. Palladium lost 0.5 percent to $744.75 an ounce. Platinum was down 0.4 percent at $1,513.16 an ounce.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
