Gold dropped to a four-month low in London and headed for the longest run of weekly losses since 2004 after Federal Reserve minutes showed policy makers may end their $85 billion monthly bond purchases this year. Silver declined to the lowest since August.
Minutes released yesterday showed a divide among Fed members on how long the purchases should last. Participants who provided estimates were “approximately evenly divided” between those who said it would be appropriate to end the purchases around mid-2013 and those who said they should continue beyond that date. Gold fell below its 200-day moving average and is down for a sixth week, the longest run since May 2004.
“That there could be a lack of further quantitative easing measures has prompted a bit of profit-taking,” James Moore, an analyst at FastMarkets Ltd. in London, said today by phone. “It’s a knee-jerk reaction. There are still ultra-low interest rates,” which will support gold, he said.
Gold for immediate delivery dropped 2.1 percent to $1,628.76 an ounce by 11:01 a.m. in London. Prices reached $1,627.45, the lowest since Aug. 21, and are down 1.6 percent this week. Gold for February delivery was 2.7 percent lower at $1,628.80 on the Comex in New York.
Bullion at the morning “fixing,” used by some mining companies to sell output, slid to $1,632.25 in London from $1,679.50 yesterday afternoon. Holdings in gold-backed exchange- traded products fell 10.2 metric tons yesterday, the most since May, to 2,620.8 tons, data compiled by Bloomberg show.
ETP assets reached a record on Dec. 20 and prices gained for a 12th consecutive year in 2012 as central banks from the U.S. to China pledged more steps to spur economic growth. While Credit Suisse Group AG yesterday said gold will average $1,740 this year, the most ever, it joined Goldman Sachs Group Inc. in predicting the 12-year bull market will probably peak in 2013.
At the Dec. 11-12 meeting, the Fed announced Treasury purchases of $45 billion a month in addition to $40 billion a month of mortgage-debt purchases begun in September. U.S. Labor Department data may show today that nonfarm payrolls rose by 153,000 last month, the most since August, according to economists surveyed by Bloomberg News.
Silver for immediate delivery fell 3 percent to $29.26 an ounce, after reaching $29.24, the lowest since Aug. 22. Platinum was down 1.2 percent at $1,544.75 an ounce. Palladium declined 1.6 percent to $682.73 an ounce.