Gold Extends Drop as Dollar Gains After Fed QE3 Signals
Gold futures fell in electronic trading as the dollar extended a rally after Federal Reserve policy makers said they probably will end their $85 billion monthly U.S. bond purchases sometime in 2013.
The greenback rose to a three-week high against a basket of major currencies after minutes from the Federal Open Market Committee’s Dec. 11-12 meeting showed members divided between a mid- or end-of-year end to the debt purchases. Earlier, gold settled down 0.8%, the biggest drop since Dec. 20, on renewed U.S. deficit concerns after a budget accord yesterday spurred a commodity rally.
“After the initial euphoria, people realized that the announcements made yesterday were just a Band-Aid solution, and the problems remain,” Frank Lesh, a trader at FuturePath Trading in Chicago, said in a telephone interview. “Many investors are moving to cash.”
Gold futures for February delivery fell $23.30, or 1.4 percent, to $1,665.50 an ounce at 2:47 p.m. on the Comex in New York. Earlier, the price settled down $14.20 at $1,674.60.
The metal increased 7 percent in 2012, rising for a 12th consecutive year, as central banks from the U.S. to China took steps to stimulate their economies.
Four years after cutting the benchmark interest rate close to zero percent, the Fed is expanding the third round of so- called quantitative easing to boost the economy and cut the jobless rate.
Silver futures for March delivery fell 1.8 percent to $30.455 in electronic trading. Earlier, the price settled down 0.9 percent at $30.72.
Assets in exchange-traded products backed by the metal rose 0.2 percent to a record 18,956 metric tons yesterday, data tracked by Bloomberg showed
On the New York Mercantile Exchange, platinum futures for April delivery gained 0.8 percent to settle at $1,579.90 an ounce. Palladium futures for March delivery dropped 1.5 percent to $697.15 an ounce.
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