Fund gold wagers slump to lowest since 2007

Fed Minutes

Minutes of the Fed’s October meeting showed that policy makers expected an improving economy will warrant trimming stimulus in coming months. The central bank will probably begin reducing $85 billion in monthly bond buying at a Dec. 17-18 meeting, according to 34% of economists surveyed Dec. 6 by Bloomberg, an increase from 17% in a Nov. 8 survey.

European Central Bank President Mario Draghi re-affirmed Dec. 5 that interest rates will stay low for the foreseeable future and the Bank of England held its key interest rate at a record low the same day. Japan is buying about 7 trillion yen ($68 billion) a month of government debt. The Fed has kept its benchmark borrowing cost near zero% since 2008. Bullion surged 70% from the end of 2008 through June 2011 as policy makers took unprecedented measures to boost growth amid most-severe global recession since World War II.

Gold’s 14-day relative-strength index fell last week to near 30, a level that suggests to some analysts using technical charts that the price may be poised to rebound. The RSI gauge was at 37.1 on Dec. 6.

‘Stable Base’

“A lot of selling has now been done, so you could see a more stable base for the gold price to build on,” said Frances Hudson, who helps manage about $271 billion of assets as the Edinburgh-based strategist at Standard Life Investments. “The reality at the moment is that the U.S. isn’t thinking of moving their interest rates. They’re talking about the possibility of tapering, which is several steps ahead.”

American employers increased payrolls by 203,000 last month, following a revised 200,000 advance in October, Labor Department figures showed Dec. 6. Gross domestic product rose at a 3.6% annual rate last quarter, up from an initial estimate of 2.8% and the strongest since the first quarter of 2012, the Commerce Department said a day earlier. The U.S. is the world’s top consumer of corn and crude, and builders in the nation put about 400 pounds (181 kilograms) of copper into the average home.

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