Spot gold prices fell for a third straight session on Thursday, slipping below the psychological $1,600 threshold for the first time in 10 days, and hovering around $1,594.16 per ounce at about 12.10 noon UAE time (8.10am GMT). Gold is now down more than $38 per ounce in two weeks, from $1,632.80 on June 6, 2012.
Analysts are citing the US Federal Reserve’s omission of any hint on a third round of quantitative easing – simplistically, printing more dollars to buoy the markets – as the reason behind the yellow metal’s most recent rout.
After peaking at $1,923 per ounce last September, gold is now down 17 per cent, with technical indicating a further decline in the coming days.
Gold futures continued to come under selling pressure this morning as traders unwound long positions after the Federal Reserve stopped short of launching a QE3 programme.
The US Fed announced that it is extending the current bond buying programme, known as ‘Operation Twist’, until the end of the year and said that it was ready to take additional steps. The bond purchasing programme had been due to expire at the end of this month.
Under Operation Twist, the Fed sells short-dated Treasury instruments and buys longer-dated Treasury’s in tandem with the aim of pushing down long-term interest rates.
The announcement disappointed market expectations for more aggressive measures to shore up growth in the world’s largest economy, following a recent string of weak US data.
Gold gained as much as 15 per cent earlier this year to hit $1,790 an ounce after the Fed said in January it would keep interest rates near zero until at least late 2014 and indicated that it could introduce a fresh round of asset-purchases.
However, prices have lost almost 10 per cent since late February, amid growing concerns the European debt crisis has been escalating.