By Nicholas Larkin & Debarati Roy - Aug 30, 2013 7:00 AM PT
Gold tumbled 16 percent this year on expectations that the Fed will slow the $85 billion in monthly debt purchases as the world’s largest economy improves. Silver for immediate delivery dropped 0.6 percent to $23.7315 an ounce, down 1.4 percent this week. Photographer: Chris Ratcliffe/Bloomberg
Gold fell, paring a second straight monthly gain, on bets that an improving U.S. economy will support the case for the Federal Reserve to curb stimulus.
The U.S. grew faster than analysts forecast in the second quarter, expanding 2.5 percent, up from an initial estimate of 1.7 percent, the Commerce Department said yesterday. Quicker expansion may allow the Fed to trim its bond-buying plan, lowering the appeal of bullion as a hedge against inflation. Gold also fell after U.K. lawmakers rejected a motion for military action against Syria, reducing demand for precious metals as a haven asset.
Gold tumbled 16 percent this year on expectations that the Fed will slow the $85 billion in monthly debt purchases as the world’s largest economy improves. Silver for immediate delivery dropped 0.6 percent to $23.7315 an ounce, down 1.4 percent this week. Photographer: Chris Ratcliffe/Bloomberg
Aug. 28 (Bloomberg) -- Philip Manduca, chief executive officer of Titanium Capital Ltd., talks about the price of gold, investing in diamonds and the conflict in Syria. He speaks with Francine Lacqua on Bloomberg Television's "On the Move." (Source: Bloomberg)
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“Many believe that the Fed will announce changes to its stimulus policy in September,” Peter Hug, the global trading director of Kitco Metals Inc., said in a report. “Notions of an imminent U.S. military attack on Syria have receded significantly the past 48 hours, putting pressure on gold.”
Gold futures for December delivery fell 1.3 percent to $1,393.90 an ounce at 9:57 a.m. on the Comex in New York. Prices reached $1,434 on Aug. 28, the highest since May 14, amid concern that the U.S. and its allies will attack Syria.
Through yesterday, bullion climbed 7.6 percent in August after jumping 7.3 percent in July. The metal is headed for the first back-to-back monthly gains since September. Prices have rebounded since reaching a 34-month low of $1,179.40 in June as the rout attracted consumers of coins, bars and jewelry.
Gold slid 16 percent this year through yesterday as some investors lost faith in the metal as a store of value and on speculation that the Fed will reduce stimulus. Officials will cut debt purchases at their next meeting on Sept. 17-18, according to 65 percent of economists in an Aug. 9-13 Bloomberg survey.
ETP Holdings
Holdings in exchange-traded products backed by bullion rose 2.6 metric tons so far this week to 1,954.6 tons, heading for a third straight week of additions, data compiled by Bloomberg show.
Silver futures for December delivery slumped 2.7 percent to $23.48 an ounce in New York. Prices have surged 20 percent this month, heading for the biggest gain since April 2011. Assets in ETPs backed by the metal reached a record 20,080.9 tons yesterday and are up 6.2 percent this year.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Debarati Roy in New York at droy5@bloomberg.net
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net
