Gold continues to trade lower on stimulus outlook

Gold rebounded on Wednesday and traded slightly higher after prices for immediate delivery plunged to $1 366.19 on Tuesday, the lowest since May 23. However, stimulus outlook in the U.S. and Japan are still weighing on the precious metal.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery stood at $1 378.25 a troy ounce at 7:44 GMT, up 0.09% for the day. Prices varied between days low of $1 373.55 and high at $1 378.65 an ounce.

Gold has lost 18% of its value so far this year amid uncertainty of Feds Quantitative Easing program direction. Japans central bank, Bank of Japan, took a decision yesterday not to expand its monetary stimulus further. BoJ stuck to its April position to increase the monetary base by 60 trillion to 70 trillion yen a year. This spurred speculation whether the U.S. central bank will follow up and reduce its own bond purchases.

Ben Bernanke, Fed chairman, said Feds monetary stimulus could be scaled back if the U.S. labor market showed stable improvement. According to a Bloomberg survey of economists last week, the U.S. central bank will reduce its monetary easing program to $65 billion a month in October.

Gold was pressured this week as positive U.S. labor data, published on Friday, sighted the U.S. economy has created more jobs than expected. Also, on Monday Standard & Poor’s upgraded the U.S. credit rating from AA+ negative to stable, one notch below the highest AAA rating, which the country had two years ago. This spurred speculations whether Fed will scale back or even completely shut its monetary easing program earlier than expected.

David Lennox, an analyst at Fat Prophets in Sydney commented on the topic: “It’s the expectations of QE having a limited time horizon. The market is fixated on the Fed.”

Meanwhile, sales of bars and gold coins at the U.S. Mint and Perth Mint have dropped, compared to April when yellow metals price had a record fall. Silver sales have also slipped.

Elsewhere on the precious metal markets, platinum, palladium and silver are all tracking golds upward direction. Platinum futures for July delivery traded 0.48% higher on the day at $1 487.05 a troy ounce at 7:40 GMT. Palladium September futures stood at $757.40 an ounce, 0.65% higher for the day and silver gained 0.52% to trade at $21.758 per ounce.