Gold Sad As QE Windup Nears

Gold futures stretched the losses as the latest Fed minutes suggested that the Fed would slow down the pace of its asset purchase plan later this year if economic continue to develop broadly as expected.
Stocks around the globe took a beating on Wednesday as investors couldn’t find the clues they were desperately looking for from the just released Federal Reserve’s July policy meeting. In the minutes, Fed policymakers indicated they are still on track to slow the central bank’s $85 billion bond-buying program this year and end it in mid-2014, but gave no signal whether the scale-back could begin in September.
The minutes from the July 30-31 meeting released on Wednesday showed US officials disunited about the appropriate timing of the first reduction in bond purchases, with “a few” officials with votes on policy looking to move soon and “a few” others urging “patience” and more of a wait-and-see approach.
US stocks took a dive immediately after the 2 pm ET release of the minutes but recovered and then plunged all over again. The Dow Jones industrial average fell 105.44, or 0.7 percent, to close at 14,897.55. The Dow is now riding a six-session losing streak and closed below 15,000 for the first time since July 3.
While the Fed minutes didn’t send a clear message of exactly when quantitative easing will start to be pulled back, the kneejerk market reaction suggests investors expect tapering to begin in September. Some investors are betting the Fed will start winding down its $85 billion per month bond buying purchases by $20 billion at the September 17-18 policy meeting, a view that got a boost from positive US employment data last week.
COMEX December gold futures are trading down nearly $7 at $ 1362.8 an ounce. The metal may face some selling if it is unable to move above $1385 an ounce.
MCX October gold futures jumped more than 2% yesterday as the Indian Rupee hit the new lifetime low of 64.33 against the US dollar and the India’s Sensex tumbled to lowest in the year. MCX October bullion may open today’s session near Rs 31200 levels with support near Rs 30800 levels with resistance near Rs 31400 levels.
Stocks have plunged 11% this month and investors are reallocating funds from India to the US. India’s 30-stockBSE Sensex fell 1.9 percent on Wednesday to close at 17,905.91, the lowest in a year.

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