2014.10.2923:52:37UTC+00Gold approaches lowest in three weeks on end of Fed easing

Gold held near its lowest value in three weeks with the dollar strengthening after the Federal Reserve announced the end of its bonds buying program amidst falling holdings in the largest gold backed exchange traded product.

Spot gold was trading at a price per ounce of $1,214.29 mid morning Singapore time on generic price from Bloomberg, up from yesterday’s $1,212.15. The precious metal declined yesterday to $1,208.50, its lowest since October 8th, when the Bloomberg Dollar Spot Index increased by the largest margin in four weeks.

Officials of the US central bank voted to push through with plans to close its monthly asset purchases and voiced out their confidence that turmoil in financial markets around the world will not significantly impact the US economy, preferring instead to focus on job growth. Policy committee members emphasized yesterday that they will keep interest rates low for an extended period of time. The key rate has been set from zero to 0.25% since 2008.

Senior commodity strategist Daniel Hynes from the Australia & New Zealand Banking Group Ltd. says that, “Quantitative easing ends in the U.S., with the FOMC appearing more positive on the economic outlook. This elicited a strong rally in the U.S. dollar and selling in gold. Movement in the U.S. dollar over the next few days could set the tone for commodities into the year end.”

Futures for gold with a delivery date in December dropped by as much as 1.2% for a price per ounce of $1,210.60 before recovering to $1,214.20 in New York’s Comex. The contract declined to its lowest since October 8th yesterday at $1,208.20.

Holdings under the SPDR Gold Trust fell for the second day in a row yesterday to 742.40 metric tons, the smallest amount since October 2008.

Spot silver increased by 0.5% to $17.1759 per ounce. Platinum for immediate delivery fell from yesterday’s $1,261 per ounce to $1,255, while palladium declined by 1.1% to end a five day gaining streak at $785.75.