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Gold Hits One-Month Low Under $1,850 as Fed Taper Talk Gains Steam

CommoditiesJun 14, 2021 05:05PM ET
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(adds settlement prices)

By Barani Krishnan

Investing.com - Gold closed at its lowest in a month after plumbing a bottom beneath $1,850 an ounce on Monday as speculators shorted the yellow metal on rising conviction that the Federal Reserve would indicate at its policy meeting this week some kind of timetable for the tapering of its asset purchases to support the U.S. economy.

Front-month gold futures on New York’s Comex settled at $1,865.90, down $13.70, or 0.7% on the day. That was the lowest close for an ounce of Comex gold since May 20. Earlier in the session, the front-month contract fell to as low as $1,846.20, a bottom not seen since May 16.

The drop came after a third straight weekly loss for gold that has shaved as much as $40, or more than 2%, off Comex gold since the week ended May 21.

The spot price of gold, reflective of real-time trades in bullion, was down $11.57, or 0.6%, at $1,866.15 by 5:00 PM ET (2100 GMT). Spot gold hit a  bottom of $1,844.95 earlier.

Traders and fund managers sometimes decide on the direction for gold by looking at the spot price — which reflects bullion for prompt delivery — instead of futures.

The 10-year yield on U.S. Treasuries rose midway through the session and the Dollar Index was down throughout the day, taking some credence away from the taper talk.

The Federal Reserve has repeatedly said that near-term price spikes will not translate into lasting inflation, and Chairman Jerome Powell is expected to stick to this stance and reassure markets the Fed’s policy will remain accommodative.

Most analysts are not expecting the central bank to begin discussing scaling back its asset purchase program before its annual conference in Jackson Hole, Wyoming, in late August.

Even so, investors will be zeroing in on the Fed's statement on Wednesday at the conclusion of its two-day policy meeting for June, held against a backdrop of persistent concerns over inflation spikes and whether these could prompt the central bank to pull back its monthly asset purchases faster than thought.

At stake is $80 billion in Treasury bonds and $40 billion in mortgage bonds that the Fed has been buying since the Covid-19 outbreak last year. A bigger decision for the Fed will be when to hike interest rates, which have been at zero and 0.25% for more than a year as the United States wrestled with the pandemic.

Gold Hits One-Month Low Under $1,850 as Fed Taper Talk Gains Steam
 

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Comments (8)
Michael Dell
Michael Dell Jun 14, 2021 8:22PM ET
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Gold will go through the roof…After the Fed meeting and also after the meetinh of August No taper and certainly no interest rates hikes until 2024
Edward Chong
Edward Chong Jun 14, 2021 8:22PM ET
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wah ha how u know.
Vîçky Disãsø
Vîçky Disãsø Jun 14, 2021 7:43PM ET
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1839 below treade for gold newxt Move on 1740 and 1620 upcoming months
Khai An
Khai An Jun 14, 2021 5:09PM ET
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Pandemic not freedom. Can you see
Suresh Patel
Suresh Patel Jun 14, 2021 1:25PM ET
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Real time to buy gold??
Hassan Najjar
Hassan Najjar Jun 14, 2021 10:43AM ET
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Gold investors rotating into BTC, dont you see?
sawthiha khaing
sawthiha khaing Jun 14, 2021 10:34AM ET
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good bro
sawthiha khaing
sawthiha khaing Jun 14, 2021 10:33AM ET
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good new
Thiago Henri
Thiago Henri Jun 14, 2021 10:29AM ET
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Nice news Barani .... :) appears you follow my comments now...kkk Im kidding :p Powell will dont say nothing again...but pressure for September to stop buy bonds must retrace gold to 1750 level or more ^^ Many shorts buyers burned on 1900 zone again ... the best now is buy here 1850 or near target 1880 max and wait that Fed surprise some people .... Dx will raise and gold will down .... on long term selling for my 1480 profit ^^ Good week for you
 
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