Tags: gold | australia | stimulus | federal reserve

Gold Seen Extending Decline by Australia as US Stimulus Winds Down

Wednesday, 26 Mar 2014 09:21 AM

Gold may extend last year’s drop, the biggest in three decades, on expectations that tapering of stimulus in the U.S. will continue as economic growth improves, according to an Australian government forecaster.

Bullion may average $1,269 an ounce in 2014 from $1,411 last year, the Canberra-based Bureau of Resources and Energy Economics said in a report. That compares with a forecast in December for an average of $1,220 this year.

U.S. Federal Reserve Chair Janet Yellen said last week that interest rates may start to rise about six months after the end of quantitative easing, prompting gold’s biggest weekly loss since November. Gold remains higher this year after Russia’s annexation of Crimea sparked the most serious confrontation with the West since the Cold War, boosting haven demand.

“The forecast continued improvement in economic conditions in the U.S. is expected to strengthen the case for further easing,” the bureau said. Gold rebounded this year as rising geopolitical tensions boosted haven demand, it said.

Gold for immediate delivery traded at $1,312.90 at 11:10 a.m. in Singapore, 8.9 percent higher in 2014. The metal rose 70 percent from December 2008 to June 2011 as the Fed pumped more than $2 trillion into the financial system and held borrowing costs near zero to boost the economy. On March 19, the Fed cut monthly bond purchases by $10 billion to $55 billion.

Global mine production may increase to 3,070 metric tons in 2014 and 3,117 tons in 2015 from 2,989 tons last year, the bureau said. Fabrication consumption, including jewelry and industrial demand, may rise 4.5 percent to 2,732 tons this year and increase to 2,789 tons in 2015, it said.

Output in Australia may total 271 tons in the year ending June 30 from 255 tons a year earlier, the bureau said. Exports may reach 279 tons from 280 tons a year earlier, it said.


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Gold may extend last year's drop, the biggest in three decades, on expectations that tapering of stimulus in the U.S. will continue as economic growth improves, according to an Australian government forecaster.
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2014-21-26
Wednesday, 26 Mar 2014 09:21 AM
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