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Gold prices decline moderately amid fears related to the reduction incentive program the Fed and cash deficit in China.
Prices rose in trading in Asia at the beginning of the day thanks to the comments of the two Fed officials who rejected the possibility of immediate termination of incentives, but the lack of interest from buyers and general uncertainty have caused the decline in prices.
HSBC Bank on Monday lowered price forecasts for gold in 2013-2014, taking into account the intentions of the Fed to reduce the volume of buying up bonds and weak prospects for economic growth in China. Credit Suisse has also lowered forecasts on Tuesday.
Futures in Shanghai on Tuesday fell 0.3 percent, pointing to weak demand in the market, ranked second in the world in consumption of gold after India. Demand in India is also reduced, as the government in an effort to reduce the trade deficit increased the import duty on gold.
Slowing Chinese economy may limit the ability of investors to buy precious metals. In addition, insufficient supply of credit in the financial system may force banks to sell the metal to get cash.
Investors also sold precious metals, based on the fact that the U.S. economy is stabilizing prompt the U.S. Federal Reserve cut the incentive program, which is now being spent every month $ 85 billion. The yield on 10-year U.S. Treasury bonds on Monday hit its highest level in nearly two years. Precious metals, which do not yield usually attract the attention of investors in times of low interest rates.
Bank Goldman Sachs on Monday lowered its forecast for gold prices this year and next, citing the improved outlook for the U.S. economy.
The analysts of the investment bank now expects gold will finish this year at $ 1,300 per ounce, which is 9.4% lower than the previous forecast. According to the bank, at the end of 2014 gold will trade at $ 1,050 an ounce, which is 17.3% lower than the previous forecast.
Analysts at BNP Paribas also downgraded its forecast and now believe that the average price this year will be 1405 dollars per troy ounce, which is 11% lower than the previous forecast. Although bond yields in the United States remains low by historical standards, "its growth is still contributing to the negative attitude" to gold, they said.
Stocks of the world's largest exchange-traded fund backed by gold (ETF) SPDR Gold Trust on Monday fell by 0.43 percent to 985.73 tonnes - the minimum level in more than four years.
The cost of the August gold futures on COMEX today dropped to 1270.70 dollars an ounce.
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