Gold Swings as Investors Weigh Fed Policy Meeting, China

Gold fluctuated before U.S. Federal Reserve policy makers conclude a meeting on 30 October as investors weighed the prospects for a reduction in stimulus with signs that demand in China may be slowing.

Bullion for immediate delivery rose and fell at least 0.3 percent before trading little changed at $1,345.60 an ounce in Singapore. Cash prices in Shanghai were at a discount to those overseas for four of the past seven days, signaling demand may be waning in the second-largest user, according to Dalian Fortune Futures Co. analyst Wang Weimin.

Gold rebounded this month on speculation the Fed won’t slow asset purchases until next year after a government shutdown hurt the economy. Policy makers last month unexpectedly refrained from reducing stimulus. BlackRock Inc. Chief Executive Officer Laurence D. Fink said yesterday it’s imperative that tapering begins as the policy is contributing to “bubble-like markets.”

Gold declined 20 percent in 2013, heading for the first annual loss since 2000. The U.S. central bank will pare the $85 billion in monthly bond buying at its March meeting.

Chinese Demand

Volumes for cash gold of 99.99 percent purity on the Shanghai Gold Exchange were 7,879 kilograms on 29 October, bourse data show, from an average of 12,069 kilograms a day last month. Volumes were a record 43,272 kilograms on April 22, when the metal’s slump into a bear market spurred a buying frenzy.

Spot bullion in Shanghai was $2.9149 an ounce cheaper than the price in London on Oct. 28. It was also cheaper on Oct. 22, Oct 24 and Oct. 25, the calculations show.

Gold for delivery in December fell as much as 0.5 percent to $1,338.30 an ounce, dropping for a third day, and traded at $1,346.20 on the Comex. Trading volume was 35 percent below the average for the past 100 days for this time of day.