Gold Loses Luster on Hints of Fed Pullback

Prices for precious metals fell Tuesday as investors anticipated that the Federal Reserve might ease up on its bond-buying program as soon as next month.

Charles Evans, president of the Federal Reserve Bank of Chicago, told reporters that the bank was “quite likely” to start reducing the purchases this year. That’s an indication he thinks the U.S. economy is healthy enough to start being weaned from the Fed’s stimulus. He didn’t rule out a decision being made at the Fed’s next meeting in September.

That surprised some investors, said Bill Strazzullo, chief market strategist at Bell Curve Trading. Strazzullo said Evans has been a big supporter of continuing the Fed’s bond buying and other stimulus programs.

“That spooked people,” Strazzullo said. “That is not good for metals.”

The Fed’s stimulus programs are aimed at propping up the economy, though pumping stimulus into the economy can also lead to inflation. That inflation worry has boosted gold because gold is sometimes seen as a safe haven from inflation. So when investors thought Tuesday that the stimulus programs might go away, the threat of inflation seemed less imminent and gold lost some of its appeal.

Gold for December delivery fell $19.90 to $1,282.50 an ounce. September silver lost 19.7 cents to $19.523 per ounce.

Palladium and platinum also fell.

September palladium lost 1.7 percent, or $12.40, to $722.80 per ounce. October platinum fell 1.4 percent, or $20.30 to $1,427.80 per ounce.

September copper was the outlier among metals. It edged up 0.5 cent to $3.173 per pound.

Key crops were mixed.

Wheat rose 5.25 cents to $6.505 per bushel. Corn lost 1.25 cents to $4.5925 per bushel. Soybeans were down 16 cents, more than 1 percent, to $11.6725 per bushel.

Crude oil fell $1.26 to $105.30 a barrel in New York.

In other energy trading, heating oil fell 4 cents to $3.01 a gallon, natural gas was unchanged at $3.32 per 1,000 cubic feet and wholesale gasoline fell 4 cents to $2.92 a gallon.