Gold Falls Before Fed Tapering Expectations

Gold futures fell the most in six weeks on speculation that the Federal Reserve will taper U.S. monetary stimulus as the economy gains, curbing demand for the precious metal as a store of value.

Today, the Fed will announce the third $10 billion cut in bond purchases, according to a Bloomberg survey. Factory output rose in February by the most in six months and housing starts were little changed, data showed this week. Gold climbed to a six-month high on March 17 as tensions escalated between Russia and Ukraine.

“The focus is on the Fed today, and good economic numbers are not helping the market either,” George Gero, a vice president and precious-metal strategist in New York at RBC Capital Markets, said in a telephone interview. “Lack of news from Crimea has lessened haven needs.”

Gold futures for April delivery fell 1.4 percent to $1,340.20 at 10:41 a.m. on the Comex in New York. A close at that price would mark the biggest decline for a most-active contract since Jan. 30. The metal headed for the third straight drop, the longest slump in 10 weeks.

Trading was 17 percent above the average for the past 100 days for this time, data compiled by Bloomberg showed.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza