Investing.com - Gold prices edged lower in quiet trading as the
dollar inched up on expectations for the Federal Reserve to make
fresh cuts to its USD75 billion monthly bond-buying stimulus
On the Comex division of the New York Mercantile Exchange, gold
futures for February delivery traded at USD1,239.80 a troy ounce
during U.S. trading, down 0.16%, up from a session low of
USD1,237.90 and off a high of 1,243.40.
The February contract settled down 0.81% at USD1,241.80 on
Futures were likely to find support at USD1,235.40 a troy ounce,
Tuesday's low, and resistance at USD1,261.30, the high from Jan.
The dollar continued to see support from the International
Monetary Fund's decision this week to hike its global economic
growth forecast to 3.7% from 2014 from an October forecast for 3.6%
The news fueled expectations for central banks to wind down
stimulus programs such as bond purchases going forward, the Federal
Reserve especially, as the multilateral lending institution
predicted the U.S. economy to grow 2.8% this year, up from an
October forecast of 2.6%.
Many market participants held firm on their expectations for the
Fed to trim its quantitative easing program to USD65 billion from
the current USD75 billion at its next policy meeting that wraps up
on Jan. 29.
Fed bond purchases aim to prop up the economy by suppressing
long-term interest rates, thus weakening the dollar as a side
effect as investors flock to asset classes like stocks, with gold
serving as an inflation hedge of choice.
Since the 2008 financial crisis, the Federal Reserve has rolled
out three rounds of quantitative easing to prop up the economy.
The current program began in September of 2012 and saw the Fed
initially buy USD85 billion in Treasury holdings and mortgage debt
a month from financial institutions.
Meanwhile, silver for March delivery was down 0.04% and trading
at USD19.862 a troy ounce, while copper futures for March delivery
were down 0.69% and trading at USD3.328 a pound.
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