Gold traders are bearish for the first time this year after the Federal Reserve signaled it may refrain from more monetary stimulus and jewelers in India, the world’s biggest bullion market, shut to protest a new tax.
“Reduced prospects for quantitative easing, if you read that as a strengthening U.S. economy, then it’s bad for gold,” said Carole Ferguson, an analyst at Fairfax IS in London. “Gold has lost some of its safe-haven shine this year. The Indian jewelry market is still very important. If strikes are a longer- term thing it’s more of a worry.”
Gold had risen as much as 14 percent to $1,792.70 an ounce by Feb. 28 on the Comex in New York. It traded at $1,626.80 by 4:47 a.m. today, for an annual gain of 3.8 percent. That compares with a 6.5 percent jump in the Standard & Poor’s GSCI gauge of 24 raw materials and a 9.6 percent increase in the MSCI All-Country World Index of equities. Treasuries lost 1.4 percent, a Bank of America Corp. index (MXWD) shows.
Indian consumers bought 567.4 metric tons of gold jewelry last year, according to the London-based World Gold Council. Australia and the U.S. are the world’s biggest gold producers behind China, producing a combined 515 tons, according to CRU, a research company in London. Indian jewelers closed stores to protest a 1 percent excise duty on non-branded gold ornaments. The nation remained the biggest gold market on an annual basis last year even as China overtook it in the fourth quarter.
“Markets seem to be assuming all is OK now, but any re- emergence of problems — Iran, Europe, and U.S. economic front — would see gold higher again,” said Adrian Day, the president of Adrian Day Asset Management in Annapolis, Maryland.