Gold declines as dollar jumps on fed’s bond plan to bolster U.S. economy

Gold prices fell as the dollar’s rally eroded demand for the metal as an alternative investment after the Federal Reserve said it will increase holdings of longer-maturity Treasuries in a bid to bolster the U.S. economy.

Gold for immediate delivery fell $18.40, or 1 percent, to $1,785.23 an ounce at 4:04 p.m. New York time after dropping as much as 1.3 percent. At 2:20 p.m., just before the Fed announcement, the metal traded at $1,805. The greenback rose as much 0.9 percent against a basket of major currencies, erasing earlier losses.

The Fed plans to buy $400 billion of bonds with maturities of six to 30 years through June while selling an equal amount of debt maturing in three years or less. That “should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative,” the Federal Open Market Committee said in a statement.

“With the dollar rally, the flight to quality is not building in gold at this moment,” Adam Klopfenstein, a senior market strategist at MF Global Holdings Inc. in Chicago, said in a telephone interview. “Everyone wants to be in the dollar and Treasuries,” after the Fed decision, he said.

In electronic trading, gold futures for December delivery fell as much as $28.10, or 1.6 percent, versus yesterday’s settlement on the Comex in New York. Earlier, the contract settled down $1, or 0.1 percent, at $1,808.10.

Futures have jumped 27 percent this year, reaching a record $1,923.70 on Sept. 6, on investor demand for a haven amid escalating debt woes in Europe and the U.S. – Bloomberg

 

Tags: , , , , , , , , ,

Posted by VBN on Sep 22 2011. Filed under Gold. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

You must be logged in to post a comment Login

Stay informed everyday

Subscribe to free RSS and email updates from Vietnam Business News

Subscribe via Email Subscribe in a Reader Follow us on Twitter Connect on Facebook

RSS China Business News

  • Gold in Vietnam falls on global cues
  • Gold down 0.81% at Rs 27,914 rupees per 10 grams on Thursday
  • India gold fell back nearly 1% on Thursday afternoon
  • Official gold rate has strengthened by 28.44% since the beginning of this year
  • Gold futures fell in European trading hours on Thursday
  • Russia’s gold and foreign exchange reserves fell in the week to Sept 16
  • Spot gold edged down 0.1 percent to $1,779.59 an ounce after losing 1.3 percent in the previous session
  • Silver prices have more than doubled to roughly $40/oz in the past 12 months

Sponsored

  • Looking for an overseas forex broker?
  • Trading Point now offering Forex Malaysia and FX Japan with Forex, CFD's and Futures.