Whitney McFerron and Glenys Sim: “Gold Sinks to 4-Week Low as Silver Declines on Taper Bets” – Bloomberg

Posted on :Sep 12, 2013

By: Whitney McFerron and Glenys Sim

Bloomberg

September 12, 2013

Gold fell to a four-week low in New York on speculation that the U.S. Federal Reserve will commit to reducing stimulus next week. Silver and platinum declined.

Gold has dropped 20 percent this year amid expectations that the Fed will pare its $85 billion a month of bond-buying as the economy improves. While data today may show U.S. jobless claims rose for the first time in three weeks, a Bloomberg survey on Sept. 6 forecast that the central bank will taper its quantitative easing by $10 billion at the Sept. 17-18 meeting.

“With initial jobless claims out this afternoon, the market may pause,” David Govett, head of precious metals at Marex Spectron Group in London, said today in an e-mailed report. “But quite frankly unless the figure is appalling, the tapering feeling will continue and the market will stay under pressure.”

Gold for December delivery lost 1.7 percent to $1,340.90 an ounce at 7:41 a.m. on the Comex in New York, after touching $1,338 an ounce, the lowest since Aug. 15. Futures trading volumes were 15 percent higher than the average in the past 100 days for this time of day, according to data compiled by Bloomberg. Bullion for immediate delivery dropped 1.8 percent to $1,341.15 an ounce in London.

Global gold demand will fall to 2,237 metric tons in the second half from 2,309 tons in the same period a year earlier and 2,533 tons in the first six months as bar buying drops from a record and central banks add less to reserves, Thomson Reuters GFMS said today. Holdings in the SPDR Gold Trust, the biggest bullion-backed exchange-traded product, were unchanged for a second day at 917.13 tons yesterday, after tumbling 32 percent this year.

Syria Plan

The U.S. and Russia meet today to discuss a plan for Syria to surrender its chemical weapons, potentially averting a military strike. Gold reached a three-month high last month as tension in the Middle East escalated and oil rallied. U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov will meet in Geneva to discuss the crisis after President Barack Obama delayed a congressional vote sanctioning military action.

“As geopolitical risks fade, the focus is shifting back to QE and the Fed meeting next week, and we expect the market to remain volatile till then,” said Wang Xiaoli, chief investment strategist at CITICS Futures Co., a unit of China’s biggest listed brokerage.

Silver for December delivery fell 2.1 percent to $22.675 an ounce in New York, after touching $22.565, the lowest since Aug. 22. Platinum for October delivery lost 1 percent to $1,458.60 an ounce, after earlier dropping to $1,457, the lowest since Aug. 8. Palladium for December delivery rose 0.4 percent to $694.15 an ounce, erasing an earlier loss.

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