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Metals Price Watch: Gold and Silver Prices Wobbling

FED Stimulus Tapering Worries Weigh on Copper

by Richard Larrick

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Metals Price Watch: Gold and Silver Prices Wobbling

Metals Price Watch: Gold and Silver Prices Wobbling

Gold and silver Tuesday, August 20: The silver price today plunged nearly four percent in early European trading due to concerns over US Fed’s plans to scale back its quantitative easing programme and technical selling. Gold also fell, retreating to as low as $1,352.2 an ounce but recovered later in the day as a weaker dollar boosted demand for gold as an alternative investment.

“The dollar is supporting the gold market,” said Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, as quoted by Bloomberg. “People will be looking for a clear indication from the Fed tomorrow.”

The Federal Reserve will release minutes of its July 30-31 meeting on Wednesday, which, traders expect, might give indication on whether the US central bank plans to start trimming its bullion-friendly monetary stimulus measures known as quantitative easing. The QE has been one of the strongest drivers for gold price in recent years.

The gold price was at $1,374.15 an ounce as of 15:48 BST, up about 0.6 percent. Silver, which had lost about 4 percent earlier, was up about 0.3 percent at $23.21 an ounce as of 15:53 BST.

Base metals

Sixty-five percent of economists surveyed by Bloomberg have said that the Fed would probably start tapering debt purchases next month – a prospect that has been depressing prices in the base metals market. The worries over tapering of stimulus today resulted in a fall in the copper price for a second straight session. Copper for delivery in three months declined on the London Metal Exchange by 0.3 percent to $7,285.50 a metric ton, reversing an earlier gain of as much as 0.4 percent. Nickel was another big faller today, with the metal’s price down 0.8 percent at $14,686 a ton.

FED Stimulus Tapering Worries Weigh on Copper
FED Stimulus Tapering Worries Weigh on Copper
“Sentiment for copper remained subdued on concern over the Fed’s stimulus view,” said Kazuhiko Saito, an analyst at commodities broker Fujitomi Co. in Tokyo, as quoted by Bloomberg. “Investors remain on the sidelines before manufacturing data in China this week.”

HSBC Holdings Plc and Markit Economics are due to release a preliminary reading of China manufacturing purchasing managers’ index for August, which is expected to show a slight increase to 48.1, compared with 47.7 in the previous month, according to analysts surveyed by Bloomberg. China is the world’s biggest consumer of copper, accounting for 40 percent of global demand.


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