SAN FRANCISCO (MarketWatch) — Gold prices lined up for a third straight session of losses on Tuesday as traders of the precious metal continued to grapple with the possibility of a reduction in U.S. monetary stimulus.
December gold (GCZ3) shed $13, or 1%, to $1,314 an ounce on the Comex division of the New York Mercantile Exchange — losses that would mark gold's third consecutive decline. Prices have tallied a loss of 3.1% in the previous two trading sessions.
Gold modestly pared some of its losses shortly after the data Tuesday showed that the U.S. consumer confidence index fell to 79.7 in September from a revised 81.8 in August. MarketWatch-polled economists expected the index to drop to 79.5.
But "amid a lack of major geopolitical developments or markets-moving economic data the past several days, the world market place continues to buzz about last week's decision by the U.S. Federal Reserve to not 'taper' its monthly bond-buying program-and when might the Fed begin that endeavor," said Jim Wyckoff, senior analyst at Kitco.com. "Several Federal Reserve officials have already spoken so far early this week, with the common thread among them being that the Fed would begin to wind down its quantitative easing when U.S. economic conditions warrant."
The December gold contract on Monday fell $5.50, or 0.4%, unable to find relief after Atlanta Fed President Dennis Lockhart and New York Fed President William Dudley offered downbeat views about the pace of U.S. economic recovery.
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The comments underscored the Fed's decision last week to keep buying $85 billion in securities each month because the economy wasn't strong enough to handle a reduction in monetary stimulus. Analysts have said gold prices benefitted from the Fed's stimulus measures.
Separately, prominent economist Nouriel Roubini on Monday said tail risks for the global economy have declined, which in turn has hurt demand for a metal often seen as a safe haven.
Gold futures had rallied on Thursday after the Fed held stimulus measures intact, but reversed course Friday after St. Louis Fed President James Bullard told Bloomberg Television that a small tapering of bond purchases is "possible" in October.
The foreign-exchange and bond markets reacted to that tapering assessment much more calmly than the gold market "where market players are clearly more sensitive," wrote analysts at Commerzbank on Monday. "This is evident from the fact that speculative net long positions fell by a further 10,000 contracts in the week before the last Fed meeting and gold [exchange-traded funds] saw renewed outflows of 2 tons last Friday."
Shares of the SPDR Gold Trust ETF (GLD) edged down by 0.5% and the iShares Silver Trust (SLV) lost 0.2% Tuesday morning. The Philadelphia Gold and Silver Index (XAU) was down 0.7%.
Back on Comex Tuesday, December silver (SIZ3) fell 32 cents, or 1.5%, to $21.54 an ounce, and copper for December delivery (HGZ3) lost nearly 6 cents, or 1.7%, to $3.24 a pound.
December palladium (PAZ3) fell $4.30, or 0.6%, to $713.65 an ounce and October platinum (PLV3) shed $2.80, or 0.2%, to $1,423.10 an ounce.
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