Gold Prices Fall Amidst Speculation on the Fed’s Tapering of Stimulus

0
123
Gold Prices Fall Amidst Speculation on the Fed’s Tapering of Stimulus
Gold Prices Fall Amidst Speculation on the Fed’s Tapering of Stimulus

Gold Prices Fall Amidst Speculation on the Fed’s Tapering of Stimulus

It looks like the decision on the part of the U.S. Federal Reserve to taper stimulus is having a severe impact on the commodities as precious metals, gold fell for a second day. According to investors the precious yellow metal fell on Tuesday, extending the previous session’s 1 percent drop. This happened as global equities rebounded.

They also believe decline in the gold prices could be attributed to liquidation pressure related to an option expiry. Additionally, the U.S. has got encouraging data that shows that the country has robust consumer confidence which diminishes desire of investors to opt for gold as a safe investment.

Earlier, gold was getting a lot of buyers when the Federal Reserve decided that it will make a $10 billion cut to the U.S. central bank’s $75 billion monthly bond-buying stimulus. Nevertheless, according to some market observers the Fed tapering worries were a major factor in gold’s 28 percent price crash last year.

Apart from gold, copper prices also fell to some extent as recent growth worries over emerging markets stirred demand fears for industrial metals. U.S. COMEX gold futures for February delivery settled down $12.60 an ounce at $1,250.80. Other industrial metals like copper have been hit badly. The metal saw a seven-week low at a time when buying interest faded ahead of the Chinese New Year.

Agricultural Commodities Up, the U.S. Crude Prices Rise to Some Extent

On the other hand, agricultural commodities are faring better as according to the latest development U.S. wheat and corn both gained as a top global buyer Egypt purchased a cargo from the country for the second time this month.

**relatedarticle**

Additionally, the fact that the extreme cold and snowfall is threatening damage to crops, the prices are expected to go higher for agricultural commodities. There was also an increase in the U.S. crude futures which gained $2/bbl on supply worries. A similar trend was seen in Natgas which went up as the U.S. is facing brutal cold forecast.

The better results for the U.S. crude is encouraging investors as it faced a lot of trouble the whole last year as the U.S. stockpiled huge quantities. Now that the consumption is going up and the stockpiles are dwindling, the crude prices are expected to go up.

Demand for natural gas is also expected to rise as forecasts for colder temperatures in the coming days is quite clear.

To contact the reporter of this story: Jonathan Millet at john@forexminute.com