Gold rally falters after 3-day move; Fed on horizon

Gold prices slipped on Wednesday, after three days of gains as short-sellers rushed to cover bets on sharp price falls, as a tentative US budget deal returned the focus to prospects for the Federal Reserve to curb monetary stimulus.

By (Reuters)

Published: Thu 12 Dec 2013, 10:06 PM

Last updated: Tue 7 Apr 2015, 5:20 PM

Spot gold was 0.3 per cent lower by 1240 GMT at $1,256.91 an ounce, having hit its highest in three weeks on Tuesday. Trade has been volatile as the short-covering rally came after the price fell to a five-month low last week.

The US central bank is due to meet on December 17-18. Most economists polled by Reuters expected the Fed to start trimming its monthly bond buying programme from March, although some warmed to the possibility of an earlier move following recent strong economic data.

“The issue now is the Fed meeting next week, so anything that changes opinion about that could be important for gold,” Macquarie analyst Matt Turner said. “The reason gold rallies when they don’t taper, even if you expect them to taper at the next meeting or the one after, is because each time they don’t taper, it keeps open a possibility of QE (quantitative easing) continuing indefinitely, perhaps forever.”

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