adminSINGAPORE. – Gold edged lower yesterday after three weeks of gains as investors awaited the results of a key Federal Reserve policy meeting this week for guidance on when the US central bank would begin to scale back its stimulus.Investors were also digesting the launch of China’s first gold-backed exchange-traded funds, which opened to lacklustre performance on the Shanghai Stock Exchange.
Spot gold fell 0,7 percent to US$1 323,96 an ounce by 7:03am GMT, after gaining 9 percent over the past three weeks. US gold climbed about US$2 to US$1 323,90.
“Gold is falling because of a lack of buying in Asia today,” said one Hong Kong-based trader.
“Everyone is waiting for the Federal Open Market Committee meeting and non-farm payroll data this week before placing bets.”
The Fed’s FOMC begins a two-day meeting today that could provide more clarity on when the US central bank might slow its US$85 billion monthly bond purchases.
Bullion has lost a fifth of its value in 2013 as signs of an economic recovery in the US sparked fears of an end to easy central bank money.
Comments from Fed chairman Ben Bernanke have reassured investors, pushing gold up for three consecutive weeks, but investors want more guidance on the exact timing of any scale-back.
Analysts and traders are keenly watching every piece of economic data, from housing to labour market conditions, to help gauge where the Fed is heading.
“Prices are unlikely to maintain their upward momentum in the seasonally weak period for demand unless US macro data deteriorate, driving further short covering-led support,” Barclays analysts wrote in a note.
Buying from China – the world’s second biggest gold consumer after India – was sluggish. Shanghai gold futures were down 0,4 percent yesterday. Indian demand remains weak following government measures to curb gold imports and reduce its trade deficit.
China’s two new gold-backed ETFs fell on their first day of trading. HuaAn Gold ETF fell nearly 1 percent, while Guotai Gold ETF was down 0,6 percent.
The two funds raised a total of US$260,94 million in their initial funding round, coming in well below expectations due to sliding gold prices and a recent credit-crunch scare.
The launch and trading of the ETFs are being closely watched to see if local investors’ appetite for paper gold can match their hunger for physical bullion.
China is set to overtake India as the world’s biggest consumer of gold in 2013, according to the World Gold Council. – Reuters.
Online Reporter