October 30, 2013 / 11:19 AM / 5 years ago

PRECIOUS-Gold drops as Fed statement offers few surprises

* Fed sticks with $85 billion bond-buying stimulus
    * FOMC comments on economic expansion, low inflation weigh
    * Elliott Management added long-gold-options bets in Q3
    * Coming up: U.S. weekly jobless claims, Chicago PMI

 (Adds analyst comment, Elliott Management news)
    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, Oct 30 (Reuters) - Gold fell in choppy
trade on Wednesday, sharply erasing early gains as investors
took profits after the U.S. Federal Reserve decided to keep its
stimulus program intact and offered few surprises.
    In its October policy statement, the U.S. central bank said
it will keep buying $85 billion in bonds a month for the time
being, with Fed officials nodding to a weaker growth outlook due
in part to the fiscal fight in Washington that shuttered much of
the government for 16 days earlier this month. 
    The Fed's comments about the U.S. economy continuing to
expand at a moderate pace and lower-than-expected inflation
weighed down on gold, traders said.
    "The expectation of Fed tapering further down the road has
already been factored into the gold market, and its comment
about moderate growth and no inflation triggered some selling,"
said Frank McGhee, head precious metals dealer at Chicago
commodities brokerage Alliance Financial LLC. 
    U.S. Treasury prices and the S&P 500 equities index 
also fell, while the U.S. dollar rose against a basket of major
currencies, pressuring bullion.   
    Spot gold was down 0.1 percent at $1,342.64 an ounce
at 4:03 p.m. EDT (2003 GMT), having earlier risen as much as 1.2
percent to a session high of $1,359.60.
    U.S. gold futures for December delivery settled
up$3.80 an ounce at $1,349.30 before the Fed announcement, with
trading volume in line with the 30-day average, preliminary
Reuters data showed.
    The Fed shocked financial markets last month by opting not
to scale back its bond-buying after allowing a perception to
harden over the summer that it was ready to start easing off on
stimulus. Its caution has since been vindicated.
    Gold surged more than 4 percent when the Fed Open Market
Committee released its previous policy statement on Sept. 18.
    Some analysts said the support from U.S. monetary stimulus
will eventually fade.
    "Real yields will almost inevitably rise further in the
coming years. The resulting increase in the opportunity cost of
holding gold will be a powerful headwind," said Julian Jessop,
head of commodities research at Capital Economics.
    In investment news, hedge fund firm Elliott Management said
it has added to its long-gold-options bet among other tactical
changes made during the third quarter. 
    Silver outperformed gold, ending up 0.5 percent
at$22.63 an ounce, having hit a one-month high of $23.06 earlier
on Wednesday.
    Platinum rose 0.6 percent to $1,468.24 an ounce,
while palladium edged up 25 cents to $744.25 an ounce.
 4:03 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1349.30   3.80   0.3  1334.50 1359.60  150,594
 US Silver DEC  22.983  0.491   2.2   22.390  23.095   51,592
 US Plat JAN   1479.90  18.00   1.2  1450.20 1481.30   10,701
 US Pall DEC    749.50   2.45   0.3   743.00  752.00    4,138
 Gold          1342.64  -1.05  -0.1  1334.95 1359.16         
 Silver         22.630  0.110   0.5   22.360  23.060
 Platinum      1468.24   8.24   0.6  1456.00 1478.00
 Palladium      744.25   0.25   0.0   744.98  749.50
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        159,311   157,113   188,177     20.82    0.56
 US Silver       53,247    42,630    55,666     29.32   -0.70
 US Platinum     10,844    13,823    12,881     18.36    0.00
 US Palladium     4,327     4,077     5,665                  

 (Additional reporting by A. Ananthalakshmi in Singapore;
editing by David Evans, Keiron Henderson, Nick Zieminski and
Peter Galloway)
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below