Gold drops as Fed authority says tapering possible in October
Published Sep 20, 2013 01:16PM ET
The commodity skyrocketed earlier this week after the Federal Reserve announced it would continue to stimulate the U.S. economy with its USD85 billion monthly bond-buying program.
Ultra-loose monetary policies that include asset purchases drive down interest rates to spur recovery, weakening the dollar in the process and making gold an attractive hedge.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,333.00 during U.S. afternoon hours, down 2.65%.
Gold prices hit a session low of USD1,328.30 a troy ounce and high of USD1,368.40 a troy ounce.
Gold futures were likely to find support at USD1,291.70 a troy ounce, Wednesday's low, and resistance at USD1,375.10, Thursday's high.
The December contract settled up 4.72% at USD1,369.30 a troy ounce on Thursday.
Gold prices soared this week after the Federal Reserve concluded a two-day monetary policy meeting and made no changes to its USD85 billion bond-buying program, much to the surprise of many.
Many market participants were expecting the U.S. central bank to trim the total by USD10 billion or more now that the economy is gaining steam, though the Fed said it wanted to see more evidence that recovery will be sustained before adjusting the pace of its purchases.
On Friday, however, St. Louis Fed President James Bullard said that the U.S. central bank could taper its stimulus program during its October meeting, which sparked a round of profit-taking that sent gold prices falling.
The Federal Reserve will hold a monetary policy meeting Oct. 29-30.
Elsewhere on the Comex, silver for December delivery was down 5.66% at USD21.973 a troy ounce, while copper for December delivery was down 0.68% and trading at USD3.324 a pound.
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Written By: Investing.com
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