Gold near five-month low on US stimulus tapering worries

Wednesday, 4 December 2013 00:00 - - {{hitsCtrl.values.hits}}

REUTERS: Gold traded near a five-month low on Tuesday as strong US economic data stoked fears of an early end to the Federal Reserve’s monetary stimulus, and the metal appeared vulnerable to further declines as more data is due this week. Spot gold edged up 0.3% to $ 1,223.6 an ounce by 0739 GMT, but remained close to its lowest levels since early July following Monday’s 2.6% fall in the wake of data showing US factory data hit a 2-1/2-year high in November.

The strong data could bring the Fed closer to tapering a mega-stimulus program that has boosted gold’s appeal as an inflation hedge. Investors fear the Fed could begin tapering later this month when it holds a policy meeting on 17-18December. Physical demand improved on Tuesday, without matching levels seen during price drops earlier this year, dealers said. Gold has lost about 27% of its value so far this year. In China, the largest buyer of bullion, premiums of 99.99% purity gold climbed to about $ 11 an ounce from $ 7 on Monday on the Shanghai Gold Exchange, but still far short of the $ 30-$ 40 levels seen in April-May.