Gold’s Drop to 34-Month Low Extends on Fed

Gold dropped to a 34-month low in New York and headed for the worst quarterly slump on record following the Federal Reserve’s comments on tapering stimulus.

Gold futures slid 25 percent this quarter, heading for the biggest loss since at least 1975, with London prices set for the largest fall since at least 1920. Fed Chairman Ben S. Bernanke said June 19 that the Fed may slow its bond-buying program this year. U.S. data may show today that consumer sentiment improved and business activity expanded, economists said.

Bullion slipped 28 percent this year, set for the biggest annual drop since 1981, after rallying the past 12 years. About $62.5 billion was wiped from the value of precious metals exchange-traded product holdings this year as some investors lost faith in them as a store of value. A lack of accelerating inflation and mounting concern about the strength of the global economy is hurting silver, platinum and palladium, which are used more in industry than gold.

“ETF holders are still selling and no one wants to be in gold,” Marc Ground, a commodity strategist at Standard Bank Plc in Johannesburg, said today by phone. “We did see physical buying come in a bit and if that continues it will provide some support.”

Gold for August delivery fell 0.8 percent to $1,201.40 an ounce by 7:39 a.m. on the Comex in New York, after reaching $1,179.40, the lowest since Aug. 2, 2010. Futures trading volume was 64 percent above average in the past 100 days for this time of day, according to data compiled by Bloomberg. Gold for immediate delivery in London added 0.1 percent to $1,202.42.

Bloomberg

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