Gold Drops Ahead of Feds Meeting

Gold scale

According to Bloomberg on June 17, gold prices in London decreased in advance the U.S. Federal Reserve begins a two-day meeting as investors considered when the central bank will reduce asset purchases.

The Federal Open Market Committee begins its two-day policy conference tomorrow. Ben S. Bernanke Fed Chairman stated last month the central bank, which is purchasing $85 billion of Treasuries and mortgage securities a month to limb the economy, could cut back quantitative easing if the U.S. economy progresses. The USD was a bit changed against the six major currencies after dropping to the lowest level since February last week.

Jonathan Butler, a precious metals strategist at Mitsubishi Corp stated that The Feds monthly FOMC conference will be strictly observed for any signs of QE narrowing. In a report, today by International (Europe) Plc in London stated that there would be bearish gold and the other precious metals.

Gold for immediate delivery dropped 0.3% to reach $1,386.54 an ounce by 9:51 a.m. in London. Prices gained 0.6% last week. In New York, Bullion for August delivery fell by 0.1% to reach $1,386.60 on the Comex chart. Futures trading volume was 57% under the normal numbers in the previous 100 days, reported by Bloomberg.

Holdings in exchange-traded products on June 14 dropped 1.1 metric tons to reach 2,116.8 tons, the lowest since March 2011, (Bloomberg). Assets decreased the past 18 weeks, the poorest run since the first product was listed in 2003.

U.S. Economy

Prices fell 17% this year as a progressing U.S. economy jumped around rumors that the Fed may reduce quantitative- easing program that intercede for bullion top a 12-year bull run in 2012. Australia’s largest gold producer, Newcrest Mining Ltd, stated this month it will put pen to paper about the value of its assets by as much as a $6 billion ($5.8 billion) after the drop in prices.