Bullion has marked four consecutive trade sessions of losses and is nearing the threshold price of $1,300 per troy ounce. The precious metal was spurred for gains in the middle of last week when Chairman Ben Bernanke with the U.S. Federal Reserve said monetary stimulus measures will remain, despite widespread expectations for tapering.
The news that drew down the value of the world's reserve currency propelled gold futures higher by roughly 4 percent. But since late last week, bullion has dropped well more than 3 percent.
"Gold continues to trade with global risk assets, which means that lack of investor appetite is still driving the market," analyst Andrey Kryuchenkov with VTB Capital told the news source on Tuesday. "I think by year-end the market will be more sure of the macroeconomic situation, because tightening will be looming and will be possibly quicker than initially thought."
At 9:49 a.m. on Tuesday, gold futures fell 0.92 percent, a $12.11 loss to $1,310.61 per troy ounce.
Dollar climbs, demand dips
The greenback advanced on Tuesday as the dollar index – a gauge of the value of the dollar against its major rivals – climbed, Reuters reports.
Demand for the yellowish metal was slipping across Asia, which comes as a surprise amid expectations that increased purchases in India and China are approaching with festival and wedding season.
"You don't expect China physical demand to pick up at this point (due to high prices), and India is still awaiting more clarity on the imports' rules," the VTB analyst told Reuters.
Fed falls under scrutiny
Bloomberg reports some investment houses are keeping a close eye on Fed action during the run-up to the body's meetings scheduled for next month.
The possibility is in play that the Fed is set to issue the order for tapering, which had been expected during last week's two days of meetings.
"The debate about whether the U.S. Federal Reserve may begin scaling back its bond purchases when it next meets at the end of October is continuing to weigh on the price," states a Tuesday report issued by Commerzbank AG, according to Bloomberg. "The gold price is therefore likely to continue to tumble towards the $1,300 mark. In China, gold buyers are likely to take advantage of the lower price level to stock up."
MarketWatch reports the yellowish metal was enduring losses from Monday commentary by two Fed presidents – Dennis Lockhart of Atlanta and William Dudley of New York. Both noted the U.S. economy is not developing as rapidly as anticipated.
Their remarks underscore the commentary of Bernanke last Wednesday, when he disclosed that stimulus would not taper but in fact would remain as is. The Fed chief said the body will continue monitoring economic data and that it prefers against a sudden tightening of policy that would shake up markets.
The precious metal's slump is likely to continue for the remainder of the year, analysts with one investment house said. Citigroup stated earlier this week that gold futures are likely to bounce higher soon but they will slide for the remainder of the year.
The price of gold will dive lower than $1,250 per troy ounce by the end of this year, the Citigroup analysts said. And that downward slide will persist into early next year, they said.
The yellowish metal is en route to snapping its yearly streak of gains unless it surges during the next three-plus months. The yearly streak presently stands at 12 years.
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