Shutterstock photo

Gold futures fall to 3-week low on Fed tapering concerns

Shutterstock photo

Shutterstock photo - Gold futures edged lower to hit a three-week low on Wednesday, as appetite for the precious metal was dampened amid ongoing uncertainty over the future of the Federal Reserve's stimulus program.

Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would end its quantitative easing program sooner-than-expected.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,279.60 a troy ounce during European morning hours, down 0.2%.

Gold prices fell to a session low of USD1,272.70 a troy ounce earlier, the weakest level since July 17.

Gold futures were likely to find short-term support at USD1,269.45 a troy ounce, the low from July 17 and resistance at USD1,319.85, the high from August 4.

The December contract settled down 1.5% at USD1,282.50 a troy ounce on Tuesday after strong U.S. trade data saw investors reassess expectations on when the Federal Reserve may start to taper its asset purchase program.

Official data showed that the U.S. trade deficit narrowed by 22.4% to a seasonally adjusted USD34.2 billion in June, the lowest level since October 2009.

Investors have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Federal Reserve to reduce its bond purchases.

Any improvement in the U.S. economy was likely to reinforce the view that the central bank will begin to taper its bond purchase program in the coming months.

Also Tuesday, Chicago Fed President Charles Evans said he expected the central bank to begin tapering its asset-purchase program by the end of the year.

An exit from the stimulus would deal a heavy blow to gold, which has thrived on demand from investors who buy gold to hedge against the inflationary risks of loose monetary policies.

The precious metal is on track to post a loss of 24% on the year amid concerns the Fed will start to unwind its stimulus program by the year's end.

Elsewhere on the Comex, silver for September delivery fell 0.75% to trade at USD19.38 a troy ounce, while copper for September delivery shed 0.35% to trade at USD3.162 a pound.

Copper traders looked ahead to data scheduled for later in the week on China's trade balance as well as a report on inflation and industrial production, amid ongoing concerns over the Asian nation's economic outlook.

China is the world's largest copper consumer, accounting for almost 40% of world consumption last year. - offers an extensive set of professional tools for the financial markets.

Read more News on or Follow us on Twitter at @ InvestingCom

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics