Forexpros – Gold prices fell in Asian trading Thursday as investors sold for profits.
The yellow metal shot up in U.S. and European trading on growing sentiment the Federal Reserve will consider stimulating the economy via quantitative easing measures, which weaken gold’s traditional hedge, the dollar.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded down 0.65% at USD1,623.55 a troy ounce.
Gold hit at a low of USD1,618.85 a troy ounce and a high of USD1,624.05 a troy ounce during the session.
Gold futures were likely to test support at USD1,546.35 a troy ounce, the low of June 1, and resistance at USD1,642.15, the high from June 6.
The Federal Reserve’s monetary policy committee will meet next week and talk has been growing that voting members are growing increasingly likely to consider rolling out a round of quantitative easing.
Under quantitative easing, the Fed buys assets held by banks such as bonds, injecting the economy with liquidity in the process with the aim of steering the country away from deflationary decline while fostering more investing and hiring.
The news was bullish for gold, since the dollar falls as a side effect for price stability under monetary stimulus.
Gold and the dollar typically trade inversely of one another.
On June 1, the U.S. government reported the economy added a net 69,000 nonfarm payrolls in May, far less than expected, which sparked talk of Federal Reserve intervention into the economy.
Profit taking took the metal back down after the Federal Reserve released its Beige Book that revealed a slightly more upbeat assessment of the U.S. economy, which wiped out gold’s gains by putting talk of easing at bay.
Elsewhere on the Comex, silver for July delivery was down 0.25% and trading at USD29.415 a troy ounce, while copper for July delivery was down 0.12% and trading at USD3.372 a pound.
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