LOS ANGELES (MarketWatch) — The announcement of the Federal Reserve's January tapering plans sent gold prices on a volatile ride that saw the front-month contract push into positive territory before giving it all back, and then some, on Thursday.
By late morning in East Asia, gold for February delivery (GCG4) was down $14.80, or 1.2%, at $1,220.20 an ounce, while March silver (SIH4) was hit much harder, down 44 cents, or 2.2%, at $19.62 an ounce.
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Enlarge Image A day earlier, gold prices settled at $1,235 an ounce on the Comex division of the New York Mercantile Exchange, up $4.90, or 0.4%, before the Fed news.
"Gold is a hedge against mismanagement of currency, and if the Federal Reserve is perceived to be doing a good job, then demand for gold will diminish," said Atyant Capital Global Opportunities Fund lead portfolio manager Vedant Mimani.
Gold initially weakened late Wednesday after the Fed said it would cut its pace of monthly asset buys to $75 billion from $85 billion. But the unexpectedly early and slight move away from quantitative easing wasn't enough to cause any meaningful decline, at least in the immediate aftermath.
"Today's announcement from the Fed is a welcome reflection of improved economic conditions in the U.S.," said World Gold Council's William Rhind. "We believe market participants will refocus on the underlying fundamentals of supply and demand, which remain positive."
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Elsewhere in metals trading Thursday, January platinum (PLF4) lost $8.10, or 0.6%, to $1,334.60 an ounce, while palladium for March delivery (PAH4) shed $1.70, or 0.2%, to $697.75 an ounce.
High-grade copper (HGH4) gave up a penny, or 0.2%, to $3.31 a pound.
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