Gold futures swayed between small gains and losses in electronic trade Tuesday, with the precious metal still grappling with the possibility of a reduction in U.S. monetary stimulus.
December gold was up $1.60, or 0.1%, to $1,328.40 an ounce, but also saw losses that would mark gold’s third consecutive decline.
The contract on Monday fell $5.50, or 0.4%, unable to find relief after Atlanta Fed President Dennis Lockhart and New York Fed President William Dudley offered downbeat views about the pace of U.S. economic recovery.
The comments underscored the Fed’s decision last week to keep buying $85 billion in securities each month because the economy wasn’t strong enough to handle a reduction in monetary stimulus. Analysts have said gold prices benefitted from the Fed’s stimulus measures.
Citigroup analysts said Monday that gold will likely get a short reprieve from the Fed’s decision to maintain the current pace of bond buying. However, they said prices before the end of the year will fall below $1,250 an ounce, a price they see sticking for next year.
Separately, prominent economist Nouriel Roubini on Monday said he’s bearish on gold in part because tail risks for the global economy have declined and that’s hurt demand for the metal often seen as a safe haven.
Gold futures on Thursday rallied after the Fed held stimulus measures intact, but reversed course Friday after St. Louis Fed President James Bullard told Bloomberg Television that a small tapering of bond purchases is “possible” in October.
The foreign exchange and bond markets reacted to that tapering assessment much more calmly than the gold market “where market players are clearly more sensitive,” wrote analysts at Commerzbank on Monday. “This is evident from the fact that speculative net long positions fell by a further 10,000 contracts in the week before the last Fed meeting and gold ETFs saw renewed outflows of 2 tons last Friday.”
The markets later Tuesday will consider separate reports on home prices for July from S&P/Case-Shiller and the Federal Housing Finance Agency. Also, the Conference Board’s consumer confidence gauge for September is expected to decline to 79.5 from 81.5, according to economists polled by MarketWatch.
In other metal-futures trade Tuesday, December silver was unchanged at $21.86 an ounce, and copper for December delivery lost 1 cent, or 0.4%, to $3.29 a pound.
December palladium fell $1.25, or 0.2%, to $716.70 an ounce, but October platinum rose $2.10, or 0.2%, to $1,428 an ounce.
Source : Marketwatch