Gold Prices Slip on Uncertainty Over Fed Policy

gold prices fall federal reserve bond buying program dollar stocks
Mario Tama/Getty Images
By Jan Harvey

LONDON -- Gold edged lower on Friday, hurt by a recovery in stock markets and gains in the dollar, as dealers awaited clearer direction on the Federal Reserve's monetary policy.

European shares climbed on Friday and the dollar index rose 0.2 percent as robust U.S. economic data lifted assets seen as higher risk, outweighing persistent uncertainty over the durability of Fed stimulus.

The Fed's next policy meeting takes place early next week. An array of firmer than expected U.S. data of late has fueled speculation it could be on track to rein in its $85 billion monthly bond-buying program.

Spot gold was down 0.4 percent at $1,379.69 an ounce at 9:56 a.m. GMT (5:56 a.m. ET), while U.S. gold futures for August delivery were down $1.60 at $1,379.20. Gold is little changed since last Friday, and has ended the last four weeks in a $10 range.
"This just reflects a lack of conviction about where the market is going to go next," Standard Chartered analyst Daniel Smith said. "The constant outflows from the exchange-traded funds are bad news, and that hasn't been strongly offset yet by the net managed money positions, although they are turning up."

"There's still an ambiguous picture from investors. People are worried about the withdrawal of quantitative easing, particularly given that the data out yesterday was reasonably good from a U.S. perspective," he added. "There are quite a few negatives at this point. We're pretty neutral on the market."

Ultra-loose monetary policy, especially in the United States, has been a key driver of higher gold prices in recent years. Uncertainty over how long this will last has made traders wary of chasing prices higher after their April crash.

The largest gold-backed exchange-traded fund, New York's SPDR Gold Trust said its holdings declined by another 6.3 tonnes on Thursday, bringing its total outflow for the year to nearly 350 tonnes.

India Demand Soft

Demand in India, the world's largest gold consumer, was muted after the wedding and festival season came to an end, traders said. It is due to restart in August.

Silver was down 0.5 percent at $21.69 an ounce, tracking gold. Spot platinum was down 0.5 percent at $1,443.74 an ounce, while spot palladium was down 0.7 percent at $724.75 an ounce.

Platinum and palladium are set for their biggest weekly falls since the mid-April crash in precious metals prices as concerns about industrial action in major producer South Africa eased a touch and after key technical levels were breached.

The NewGold Platinum ETF launched by Absa Capital in late April, which already accounts for around 20 percent of total global platinum ETF holdings, said its holdings rose by nearly 16,000 ounces or 4.3 percent on Thursday.

"The rapid growth of this fund has been astounding as investors, recognizing the issues facing platinum supply, clearly seek to gain exposure to the metal in preference to the equities, most of which have fared poorly over the same time period," Investec said in a note on Friday.


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9 Comments

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goodgrief61945

When I was in high school, gold was $40/oz. Guess I should have bought a couple of pounds.

June 14 2013 at 1:02 PM Report abuse +1 rate up rate down Reply
1 reply to goodgrief61945's comment
housecheck76

$40 back then was a lot...that same $40 today does not buy much.

June 14 2013 at 1:26 PM Report abuse rate up rate down Reply
scottee

the Fed manipulates gold prices.
and stock prices.
and interest rates.

June 14 2013 at 10:59 AM Report abuse rate up rate down Reply
1 reply to scottee's comment
mily469

it is definitely not the fed manipulating gold prices. it is 4 or 5 of the too big to fail banks calling the gold prices today. the same banks that gave you the housing bubble and libor scandal among other things. that is just a fact/reality.

June 14 2013 at 12:00 PM Report abuse rate up rate down Reply
housecheck76

The demise of gold is over rated. It is not down now...up over$2...gold and silver are money everything else is paper.

June 14 2013 at 10:18 AM Report abuse rate up rate down Reply
emmett

As stocks rise and fall to the slightest fluctuation of news good or bad metals remain a solid investment over time and can only rise in value in a volatile environment .

June 14 2013 at 10:16 AM Report abuse rate up rate down Reply
mily469

gold is a bubble waiting long to burst. get gold right haha.

June 14 2013 at 9:29 AM Report abuse +1 rate up rate down Reply
1 reply to mily469's comment
housecheck76

The dollar bubble is about to burst and when it does you will not be able to buy gold at any price...and your stock market will collapse because phoney fiat dollars are propping it up.

June 14 2013 at 10:21 AM Report abuse +1 rate up rate down Reply
1 reply to housecheck76's comment
juststeve35

All money is fiat...

smh

A little knowledge is a dangerous thing.

June 14 2013 at 2:18 PM Report abuse rate up rate down