Gold Continues Drop As Fed Tapering Looms

Gold dropped to a two-week low, heading for the longest losing streak in a month, as expectations that the U.S. Federal Reserve will keep reducing stimulus outweighed signs of physical demand in China.

Bullion for immediate delivery fell as much as 0.4 percent to $1,231.86 an ounce, the lowest level since Jan. 10, and was at $1,233 at 9:09 a.m. in Singapore. A third day of declines would be the longest run of losses since the period to Dec. 19. The Bloomberg U.S. Dollar Index rose for an eighth day in the longest rally since May 2012, and traded near a four-month high.

Data today may show that the number of Americans continuing to apply for jobless benefits fell and home sales increased, supporting the case for less stimulus before Fed policy makers meet Jan. 28-29. In China, which probably overtook India as the biggest consumer last year, 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.

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