Gold Holds Drop From Two-Month High on Stimulus, Demand Outlook
Bullion for immediate delivery traded at $1,256.15 an ounce at 8:57 a.m. in Singapore from $1,257.10 yesterday, when prices rallied to $1,279.61, the highest level since Nov. 18, before ending 1 percent lower. Platinum climbed 0.6 percent to $1,420.38 an ounce.
Gold rebounded from a six-month low on Dec. 31 as signs of increased demand in Asia countered expectations that Fed policy makers, who meet Jan. 28-29, will continue paring the bank’s bond-buying program after deciding in December to start reductions. Data yesterday showed that bullion shipments to China from Hong Kong expanded to a record 1,108.8 metric tons in 2013 as prices that dropped the most since 1981 lured buyers.
“Gold could be under pressure in the wake of the Fed move,” Edward Meir, an analyst at INTL FCStone in New York, said in a note. “Although an additional taper of $10 billion is widely expected, much will ride on the statement’s policy wording and tone.”
Gold for April delivery lost 0.6 percent to $1,256.30 an ounce on the Comex. The Fed will reduce asset purchases by $10 billion at each meeting to end the program this year, according to the median of forecasts by economists in a Bloomberg survey.
Chinese Demand
While volumes for the benchmark contract on the Shanghai Gold Exchange exceeded the fourth quarter’s daily average of about 11,525 kilograms every day since Jan. 6, they fell for a second day yesterday. The country probably overtook India as the biggest consumer last year.
“We are sellers of gold rallies,” UBS AG analyst Edel Tully wrote in an e-mail yesterday. “With much of Asia and in particular China winding down for Lunar New Year celebrations, physical demand this week will be very lacking.”