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Will Gold Fall Further If Fed Drops Stimulus another $10 Billion?

Will Gold Fall Further If Fed Drops Stimulus another $10 Billion? (Reuters)

Speculation that incoming Fed Chair Janet Yellen will accelerate Fed stimulus tapering led to a stronger dollar and falling gold prices. With the word on the street that the Fed would consider additional tapering measures at next week’s meeting of the Federal Open Market Committee (FOMC), the dollar rose 0.1 percent against a basket of other currencies. But gold, on the other hand, fell again — this time dropping 0.4 percent to $1,247.90 an ounce. That price is down from a six-week high of $1,259.85 reached yesterday. This move also has led to a decrease in China’s purchases of gold, as it is way more attractive to the world’s second-largest economy at lower levels. If Yellen does cut another $10 billion from U.S. stimulus — down to just $65 billion a month – expect a boost in the price of the dollar and a drop in the price of gold. Will it be enough to get you back into gold though?

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