Gold drops as Fed hints at tapering monthly asset purchases
Published Nov 20, 2013 03:23PM ET
Stimulus tools such as the Fed's USD85 billion in monthly bond purchases aim to spur recovery by driving down interest rates, weakening the U.S. dollar in the process and thus making gold an attractive hedge.
Talk of tapering often sends gold prices falling.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,244.70 during U.S. afternoon hours, down 2.26%.
Gold prices hit a session low of USD1,240.30 a troy ounce and high of USD1,275.70 a troy ounce.
Gold futures were likely to find support at USD1,214.55 a troy ounce, the low from July 8, and resistance at USD1,293.60, Thursday's high.
The December contract settled up 0.09% at USD1,273.50 a troy ounce on Tuesday.
A decision to taper the pace of assets will come when economic indicators point to an economy that is clearly gaining steam, and although monetary authorities did not suggest when that time may arrive, metals markets felt it will come soon.
"During this general discussion of policy strategy and tactics, participants reviewed issues specific to the Committee's asset purchase program. They generally expected that the data would prove consistent with the Committee's outlook for ongoing improvement in labor market conditions and would thus warrant trimming the pace of purchases in coming months," the minutes read.
Elsewhere, the U.S. Commerce Department reported earlier that retail sales expanded 0.4% in October, blowing past expectations for a 0.1% gain after coming in flat the month earlier.
The data fueled optimism that the consumer-driven U.S. economy is on the mend and may keep the Federal Reserve on track to begin winding down stimulus measures in early 2014.
Elsewhere on the Comex, silver for December delivery was down 2.39% at USD19.848 a troy ounce, while copper for December delivery was down 0.40% and trading at USD3.145 a pound.
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Written By: Investing.com
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