Gold slips after three-week gain
Singapore, July 29, 2013
Gold edged lower on Monday after three weeks of gains as investors awaited the results from a key Federal Reserve policy meeting this week for guidance on when the central bank would begin to scale back its stimulus.
Investors were also digesting the launch of China's first gold-backed exchange traded funds (ETFs), which opened to lacklustre performance on the Shanghai Stock Exchange.
Spot gold fell 0.5 per cent to $1,326.91 an ounce by 0331 GMT, after gaining 9 per cent over the last three weeks.
US gold gained about $5 to $1,326.90.
"Gold is falling because of a lack of buying in Asia today," said one Hong Kong-based trader. "Everyone is waiting for the FOMC meeting and nonfarm payroll data this week before placing bets."
The Fed's Federal Open Market Committee (FOMC) begins a two-day meeting on Tuesday that could provide more clarity on when the US central bank would slow its $85 billion monthly bond purchases.
Bullion has lost a fifth of its value this year as signs of an economic recovery in the United States sparked fears of an end to easy central bank money. Comments from Chairman Ben Bernanke have reassured investors, pushing gold up for three straight weeks, but investors want more guidance on the exact timing of any scaleback.
Analysts and traders are keenly watching every piece of economic data from housing to labour market conditions to help gauge where the Fed is heading.
Buying from China - the world's second biggest gold consumer after India - was sluggish. Shanghai gold futures were down 0.4 per cent on Monday.
Indian demand remains weak following government measures to curb gold imports and reduce its trade deficit.
CHINA GOLD ETFs
China's two new gold-backed ETFs fell on their first day of trading. HuaAn Gold ETF fell 0.5 per cent, while Guotai Gold ETF was down 0.6 per cent.
The two funds raised a total of 1.6 billion yuan ($260.94 million) in their initial funding round, coming in well below expectations due to sliding gold prices and a recent credit-crunch scare.
The launch and trading of the ETFs are being closely watched to see if local investors' appetite for paper gold can match their hunger for physical bullion.
China is set to overtake India as the world's biggest consumer of gold this year, according to the World Gold Council. - Reuters