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Gold Extends Decline as Fed Sees Growth While Keeping Stimulus - (Bloomberg)

Posted by Chris Advincula on Oct 31, 2013 6:49:00 AM

Gold retreated for a third day, trimming a monthly advance, on speculation that the U.S. Federal Reserve will begin scaling back monetary stimulus as the economy improves. Silver, platinum and palladium fell.

Bullion for immediate delivery lost as much as 0.7 percent to $1,335.30 an ounce, and traded at $1,335.70 at 2:22 p.m. in Singapore. Prices are up 0.5 percent this month as investors bet that the Fed won’t slow the pace of asset purchases until next year after a 16-day government shutdown hurt the economy.

The central bank maintained its $85 billion in monthly bond purchases yesterday, while noting that there are signs of “underlying strength” in the largest economy. Gold slumped 20 percent in 2013, heading for the first annual loss since 2000, as the unprecedented money printing failed to stoke inflation and investors sold metal from exchange-traded products. Bullion fell yesterday as the dollar strengthened for a fourth day.

“The Fed retains language it used in September, which suggests it plans to decrease the bond buying program if the economy improves,” James Steel, an analyst at HSBC Securities (USA) Inc., wrote in a note. “The path of least resistance is lower, at least in the very near term.”

Data yesterday showed that U.S. consumer prices increased 1.2 percent in the 12 months through September, the lowest since April. Holdings in bullion-backed ETPs are set to contract for a 10th month in October and are down 29 percent this year after climbing every year since the first product was listed in 2003.

Gold for delivery in December fell as much as 1.1 percent to $1,335 an ounce, and traded at $1,335.90 on the Comex in New York, paring a monthly increase. Trading volume was 33 percent below the average for the past 100 days for this time of day.

Spot silver tumbled as much as 1.9 percent to $22.3212 an ounce and was at $22.3743, trimming a monthly gain. Platinum declined 0.9 percent to $1,460.48 an ounce, also paring a monthly advance. Palladium lost 0.3 percent to $743.90 an ounce. 


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