YEREVAN, September 22. / ARKA /. Gold prices fell as the dollar’s rally eroded demand for the metal as an alternative investment after the Federal Reserve said it will increase holdings of longer-maturity Treasuries in a bid to bolster the U.S. economy, according to reports from stock exchanges.
Gold for immediate delivery fell $18.40, or 1 percent, to $1,785.23 an ounce at 4:04 p.m. New York time after dropping as much as 1.3 percent. At 2:20 p.m., just before the Fed announcement, the metal traded at $1,805. The greenback rose as much 0.9 percent against a basket of major currencies, erasing earlier losses.
The Fed plans to buy $400 billion of bonds with maturities of six to 30 years through June while selling an equal amount of debt maturing in three years or less. That “should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative,” the Federal Open Market Committee said in a statement.
“With the dollar rally, the flight to quality is not building in gold at this moment,” Adam Klopfenstein, a senior market strategist at MF Global Holdings Inc. in Chicago, said in a telephone interview. “Everyone wants to be in the dollar and Treasuries,” after the Fed decision, he said.
In electronic trading, gold futures for December delivery fell as much as $28.10, or 1.6 percent, versus yesterday’s settlement on the Comex in New York. Earlier, the contract settled down $1, or 0.1 percent, at $1,808.10.
Futures have jumped 27 percent this year, reaching a record $1,923.70 on Sept. 6, on investor demand for a haven amid escalating debt woes in Europe and the U.S. -0-
