Gold Hits Six-Week Low Ahead Of Taper Word

Gold futures returned to their losing ways Wednesday, giving back all the gains brought on earlier this week after Larry Summers withdrew his name from consideration for the job of U.S. Federal Reserve chairman.

Gold for December delivery  fell $15.40, or 1.2%, to $1,294.00 an ounce in electronic trade, breaking below levels not seen since early August.

All eyes will be on the Federal Reserve later today, with analysts calling for the bank to cut $10 billion to $15 billion off its $85 billion-a-month bond-buying program. Read: Best and worst reasons for Fed taper.

“The bull camp has to hope that the Fed takes a pass on tapering Wednesday afternoon,” said CME Group in Tuesday report, “but even if the Fed delays tapering this month, the fear of tapering ahead might be rekindled by any series of positive U.S. data points.”

Gold futures had risen above $1,315 an ounce after former U.S. Treasury Secretary Larry Summers on Monday dropped out of the race to become the head of the Fed. Summers was widely viewed as more likely to push for a faster end to the central bank’s easy-money policies that have been credited for supporting gold prices and weighing on the dollar.

But gold has been stuck in a rut of late, with futures in the red for nine of the previous 10 sessions. At the same time, the S&P 500 has been on a tear, surpassing 1,700 for the first time since Aug. 5.

In other trading action, December palladium lost $10.50, or 1.5%, to $696.45 an ounce, while October platinum shed $9.00, or 0.6%, to $1,413.80 an ounce.

December silver gave up 37 cents, or 1.7%, to $21.42, and December copper was mostly flat at $3.22 a pound.

Source : Marketwatch