Gold Prices Fall More Than 1%; Silver Prices Also Edge Lower
Gold prices fell more than more than 1% on Tuesday as edgy investors remained in sidelines ahead of the Federal Reserve’s policy rate statement on Wednesday. Silver prices also slipped in trading on Tuesday.
U.S. gold futures for August delivery fell $16.20 or 1.2% to settle at $1,366.90 an ounce while spot gold was last down 1.24% to $1,367.20 an ounce.
The Fed will conclude its two-day open market committee meeting (FOMC) on Wednesday. Market participants are expecting more clarity from the Fed over its multi-billion dollar bond purchase program.
With U.S. macroeconomic indicators showing signs of gradual recovery in the economy, speculation is rife that the Fed could start tapering its bond purchase program sooner than later.
The Federal Reserve’s ultra-loose monetary policy since 2008/09 has boosted bullion’s inflation- hedge appeal with prices peaking at $1,920 an ounce back in September 2011.
However, the metal has been under pressure right through this year as better performing equity markets and rising uncertainty over when the Fed would start to wind down its economic stimulating measures prompted investors to shun safe-haven and inflation hedge bets.
Year-to-date, the metal is down about 18%.
Still, many strategists believe that Fed might wait little longer before its completely halts its bond purchase program.
“Gold is trading weaker on the fear that the FOMC may reduce the volume (of QE3),” said Peter Fertig, a consultant at Quantitative Commodity Research, according to Reuters.
“But if anything they will be scaling out gradually, there will not be an abrupt end to QE,” added Fertig.
Silver futures were last down 0.47% to $21.65 an ounce.
In late trading, the iShares Silver Trust (ETF) (NYSE: SLV) was down 0.81%, and the ProShares Ultra Silver (ETF) (NYSE: AGQ) was down 1.45%.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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