(Bloomberg) Gold dropped for two days straight in London ahead of the U.S. Federal Reserve policy meeting as investors considered when the central bank will reduce stimulus.
The U.S. central bank, which starts a two-day consultation today, currently buys $85 billion a month of Treasury; Ben S. Bernanke Fed Chairman said last month the rate of monthly purchases might be cut down if the employment status indicates a continuous development. Economists said, data expected today may show U.S. housing starts rose in May.
In a report today by Joni Teves, an analyst at UBS AG in London, “The atmosphere is clearly difficult for gold at the moment, and downside risks loom,”
In London, gold for immediate delivery dropped by 0.5% to reach $1,379.10 an ounce by 9:37 a.m. On the Comex in New York, bullion for August delivery also ran below by 0.3% to reach $1,378.50. Futures trading volume was 42% under the average in the past 100 days. (Bloomberg numbers)
Yesterday, holdings in exchange-traded products lost 0.6 metric ton to 2,116.2 tons, the lowest since March 2011. Assets dropped by 20% in 2013 after increasing each year eventually when the first product was registered in 2003.
Prices fell 18% this year as a progressing U.S. economy rose rumors around the Fed may reduce quantitative-easing measures that assisted bullion cap a 12-year bull run in 2012. Australia’s largest gold producer, Newcrest Mining Ltd. (NCM), stated that this month it will write down the value of its assets by as much as $6 billion ($5.7 billion) after the drop in prices.
In India, last year’s biggest gold consumer, Economic Affairs Secretary Arvind Mayaram stated that the nation might apply more measures to limit imports after increasing a tax on inbound shipments this month. The raised duty has produced a lack among jewelers in the country, on the word of the All India Gems & Jewellery Trade Association.