This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration. Need a new registration confirmation email? Click here
NEW YORK (
Gold prices were dropping on Tuesday after the Bank of Japan chose to continue its current purchases of government bonds, despite recent pitfalls in the bond market there.
Gold for August delivery at the COMEX division of the CME was falling $12.30 to $1,373.70 an ounce. The
gold price traded as high as $1,387.20 and as low as $1,364.50 an ounce, while the spot price was down $13.58.
In its latest statement on monetary policy, the Bank of Japan said it would continue to purchase at an annual pace 50 trillion yen ($516.18 billion) of Japanese government bonds.
Central banks, including the
Federal Reserve, the European Central Bank, the Bank of England and others, have been implementing monetary stimulus into the global economy since the financial crisis of 2008. Traders, investors and analysts view central bank quantitative easing as a policy of inflation, which makes gold an attractive hedge against such an event.
Volume for gold futures trading has been light as China is on holiday for the first half of the week.
Mihir Dange, an options trader for Grafite Capital, said the double-digit drop in gold prices due to the news from the Bank of Japan didn't surprise him as a single trade can easily move a thinly traded market.
Silver prices for July delivery were slipping 33 cents to $21.60 an ounce, while the
U.S. dollar index was off 0.38% to $81.38.
Traders are looking ahead this week to the jobless claims report due Thursday, but could expect broader market-moving news next Wednesday when the Fed releases its latest policy-making statement and economic projections. Chairman Ben Bernanke will follow those reports with a press conference.
Gold mining stocks were mostly lower on Tuesday. Shares of
Kinross Gold(KGC - Get Report) were dropping 4.3%, and shares of
Yamana Gold(AUY - Get Report) were off 4.2%.
Among volume leaders,
Barrick Gold(ABX - Get Report) was slumping 1.6%.
SPDR Gold Trust(GLD) was sliding 0.78% to $132.90 a share, while
iShares Gold Trust(IAU) was off 0.89% to $13.35.
-- Written by Joe Deaux in New York.