Gold traded off $1,200 an ounce early Monday in a breather from sharp losses posted a week ago, as traders hardly digest the impact of Federal Reserve’s stimulus tapering.
The Fed's bond purchases are no longer bullion-friendly, and the last hectic drop in price was totally a sign the metal is no longer vulnerable to the central bank`s quantitative easing program (QE) as well. But, as the year nears to an end, traders are pondering whether gold has got further from a home being value amid lingering fears about the aftermath of the Fed's starting to scale back its stimulus plan as early as January - a move that was broadly anticipated by the consensus since mid-2013.
Spot gold was stuck around $1,202.27 an ounce as of 02:55 EST, compared with Friday's close at $1,203.24, and so far the sideway range continues between $1,199.86 and $1,204.61.
The Fed's decision Wednesday to start tapering its $85 billion bond buying program by $10 billion next month fueled more speculation the metal will lose further value if the US central bank reduces liquidity to diminish the risk of inflation.
Meanwhile, stimulus tapering worries continue to dominate sentiment. The yellow metal has now lost over a quarter of its value year to date, and on course for worst annual performance in over three decades. But can gold bounce back in 2014?
Although the reason to hold gold as a hedge against inflation don’t seems to be there, a slight turnaround in prices is likely with the new millennium, as gold demand typically peaks around ahead of the holiday season.
The thin trade remains on hold due to the Christmas holiday. Other precious spots were also trading in the same thin rangebound.
- Silver was little changed around $19.42 an ounce
- Platinum rose 0.35% to $1,337.75 an ounce
- Palladium rose 0.42% to $701.67 an ounce.