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Gold almost friendless as minutes suggest Fed is braced

Last updated: 09:15 21 Nov 2013 EST, First published: 10:15 21 Nov 2013 EST

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Gold has had no place to hide this week with latest minutes from the US Federal Reserve’s last meet ladling on the gloom.

Spot gold was at a near four month low of US$1,242 as the Fed indicated it was ready to start tapering its bond-buying programme, but again left the wording vague enough to accommodate almost any view on when it may actually start.

A good non-farm payrolls number for November could see the monthly bond-buying programme reduced as early as next month according to St Louis Fed President James Bullard.

It was another excuse for the bears to sharpen their claws, with Goldman Sachs repeating it sees the gold price down at US$1.050 next year.

Adding to the black mood of gold bugs, new unemployment claims in the US fell to the lowest for two months, though this may have been affected by the Veterans Day holiday.

Reports that the European Central bank is considering a negative number on one of its key rates of interest also boosted the dollar. Traditionally, the US currency and the gold price move in opposite directions.

Physical demand has not yet responded to the sharp fall in the gold price this week, while latest industry figures suggest no impact form lower prices on production.

Indeed, respected consultant Thomson GFMS forecast a record high for gold production this year due to the heavy capital investment into the mining industry over the past ten years.

Elsewhere, silver followed gold lower and slipped below US$20 per ounce, though platinum managed to edged up after a bullish interim statement from car exhaust filter maker and refiner Johnson Matthey.

Shares of the listed companies were hit by the lower gold price and silver prices.

Major movers
Randgold Resources down 130p at 4,365p
Fresnillo down 40p at 865p
Anglo American down 23p at 1,382p

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