Gold extends string of losses on tapering fears

Posted by Charles Gunning

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Gold prices extended declines into a seventh consecutive day Wednesday, pushing further away from the key $1,300-an-ounce level as the outlook for monetary-stimulus tapering strengthened.

Bullion for immediate delivery lost as much as 0.8 percent to $1,273.55 an ounce, the lowest since July 17, and was little changed at $1,283.28 at 2:42 p.m. in Singapore. Gold for December delivery fell as much as 0.8 percent to $1,272.50 an ounce on the Comex in New York, the lowest for a most-active contract since July 17, and was at $1,282.20. Futures slumped a seventh day in the longest losing streak since mid-May.

That followed Tuesday’s fall of $19.90, or 1.5%, on the New York Mercantile Exchange, with losses accelerating after two Federal Reserve officials said they expect the central bank to reduce its asset purchases this year from their current $85 billion a month because of economic improvement.

Fed Bank of Chicago President Charles Evans, who has backed monetary stimulus, said yesterday that there has been “good improvement” in the labor market and indicated a tapering of the bond-buying program in September is possible. Gold lost 23 percent this year amid speculation the Fed will wind down the quantitative-easing program. U.S. central bankers are scheduled to meet Sept. 17-18 to review the economy and assess policy.

 

Stimulus from the Fed has been seen as a benefit for gold prices.