Gold swung near a one-week high, heading for a monthly and quarterly loss, as the Federal Reserve scales back stimulus amid a strengthening U.S. economy, damping demand for a protection of wealth.
Gold fell 3.4 percent in December for a fourth monthly loss and tumbled 28 percent this year, poised for its worst annual drop since 1981, as U.S. equities surged to records and unprecedented money printing failed to stoke inflation. Data yesterday showed initial jobless claims fell more than forecast last week, underscoring the confidence expressed by the Fed when it said Dec. 18 that it will slow bond purchases amid an improving economy.
“It remains to be seen what gold will do over the balance of the year and heading into the New Year,”Edward Meir, an analyst at INTL FCStone in New York, wrote in a note. “We suspect we will see weaker prices over the short-term, as stronger equity markets, better global growth readings and the absence of inflation, all combine to keep the pressure.”
Gold entered a bear market in April and is set to halt a 12-year bull run as assets in bullion-backed exchange-traded products shrink after expanding every year since the first product was launched in 2003. Holdings in the SPDR Gold Trust, the biggest ETP, fell to 804.22 metric tons yesterday, the lowest since January 2009, and have contracted 40 percent this year, according to data on the fund’s website.
