Gold edges lower as Fed begins another round of taper

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Gold edges lower as Fed begins another round of taper
Gold did not react much to QE3 easing by the US Federal Reserve, unlike other asset classes and was trading with marginal losses.

Gold for Feb delivery on the MCX was trading down Rs 29, at Rs 29,710. Gold in the international market was also marginally down at $1262.

On Wednesday, the US Federal Reserve said that it would be reducing its bond purchase programme by $10 billion to $65 billion each month.

The reduction in the bond purchase programme also results in less liquidity, which is not good for asset classes like equities and gold.

In 2013, a lot of liquidity was unleashed by the US Federal Reserve and a lot of this money found its way into assets like equities, which drove stocks from Europe to the US, to record highs. However, gold did not manage to attract a lot of money and international prices of gold fell for the first time in 12 years in 2013.

Read more about: gold, qe3
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