Gold edges lower for sixth session on Fed stimulus worries
Gold eased for a sixth straight session today to trade near two-week lows as renewed uncertainty over when the US Federal Reserve will scale back its stimulus measures weighed on sentiment.business Updated: Nov 04, 2013 17:33 IST
Gold eased for a sixth straight session on Monday to trade near two-week lows as renewed uncertainty over when the US Federal Reserve will scale back its stimulus measures weighed on sentiment.
Last month the US central bank said it would stick with its monthly $85 billion bond purchases, citing a drawn-out budget battle in Washington and the need for stronger economic data, leading many to believe its tapering of the programme would not begin until next year.
However, recent strong data on US factory output and jobless claims have brought back the possibility that it may start to scale back this year.
"There are worries now in the market that a December tapering is possible," said a precious metals trader in Hong Kong. "The dollar movement is also hurting gold. Until we get a clear view on the Fed plan, gold will react to data."
Spot gold fell 0.06 percent to $1,313.95 an ounce by 0715 GMT, while the dollar index was near six-week highs. Gold fell to a low of $1,305.69 on Friday, its lowest since Oct. 17.
If the metal ends down on Monday, it would be its longest losing streak since the seven days to May 17.
The Fed, which meets next on December 17-18, has said the timing of its tapering depends on the health of labour and housing markets.
The Fed's bond-buying has burnished gold's appeal as a hedge against inflation, boosting prices over the past few years, but signs that the programme could be coming to an end have hurt prices this year.
The sharp drop in prices last week of nearly 3% has failed to revive physical demand and some dealers say the price may have to fall below $1,300 to attract more buyers.
Premiums on the Shanghai Gold Exchange picked up by about $2 to $5 an ounce on Monday from the previous session but were still well below April-May levels of $30.
Indian demand was muted during the biggest gold-buying festivals of Dhanteras and Diwali, celebrated on Friday and over the weekend, with many opting for cheaper silver due to high gold premiums and the scarcity of the metal on the domestic market.