Gold back below $ 1,200 on strong US data, taper worries

Wednesday, 25 December 2013 00:00 -     - {{hitsCtrl.values.hits}}

SINGAPORE (Reuters): Gold was hovering below $ 1,200 on Tuesday and looked likely to fall to its lowest in six months in thin year-end trade, with strong US spending data hurting the metal’s safe-haven appeal. The impending tapering of the Federal Reserve’s stimulus measures also dimmed gold’s allure as a hedge against inflation. Gold is down nearly 30% for the year, and is headed for its biggest annual decline in 32 years. “Prices will likely remain under pressure over the short-term as a combination of stronger US macro statistics, higher equity markets and continued outflows of money from gold exchange-traded funds weigh on sentiment going into 2014,” said INTL FCStone analyst Edward Meir. Spot gold had eased 0.1% to $ 1,197.76 an ounce by 0722 GMT, after dropping 0.3% in the previous session. It fell to a six-month low of $ 1,185.10 last week after the Fed announced it would begin tapering its $ 85 billion in monthly bond purchases from next month, before recovering slightly on short-covering.