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Is Gold Going for a New Price Slump?

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Gold has been generally declining since March despite some rebounds and analysts say that the precious metal may continue to fall on expectations that the Federal Reserve may scale down its stimulus policy.

Gold loses on fears of ending stimulus

Gold continued to decline this week on the international markets and is currently trading below USD 1,300 an ounce. This happens as investors speculate that the U.S. Federal Reserve is to soon put brakes to its monetary stimulus and reduce bond purchases. As the U.S. economy shows signs of recovery and most of the companies publish better-than-expected second-quarter results the Central Bank gets closer to slowing purchasing of bonds.

Gold rose over 7 percent in July after Chairman of the Federal Reserve Ben S. Bernanke said that it was too early to decide whether stimulus should be decrease. Now strong data coming from the U.S. stir doubts policy-makers may decide it was a time for change.

As gold keeps declining, silver for September delivery also lost 0.3 percent.

U.S. figures

Strong U.S. data regarding GDP and factory figures bring loses to gold in the past weeks. Worse employment figures make the metal win back some of its lost positions. Most of the analysts and traders expect that the Federal Reserve will not start scaling back bond-buying at least until September. Still, US economy grew above previous expectations in the second quarter of the year.

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. He has no business nor personal relationships with any mentioned government entities or stocks. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion.

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