Precious Metal and Industrial Metals Tumble

Gold is treading between small gains and losses this morning after declining on Thursday to trade at 1317.90, while silver eased by 61 points to trade at 21.623. Market participants are

closely watching for developments from this weekend’s Group of 20 meeting of finance ministers and central bank chiefs in Sydney, at which global growth and recent turmoil in emerging markets are expected to be in focus. The G20 needs to discuss the impact of the Fed’s stimulus withdrawal on emerging markets, a top Russian central banker said on Friday.

Precious metals fell for the second straight day as concern that the Federal Reserve will press on with cuts in U.S. monetary stimulus damped demand for the metal as an alternative asset. Several Fed policy makers said that in “the absence of an appreciable change in the economic outlook, there should be a clear presumption in favor of continuing to reduce the pace” of bond purchases. Gold rose 70 percent from December 2008 to June 2011 as the central bank pumped more than $2 trillion into the financial system. The Fed cut monthly bond buying by $10 billion at each of its past two meetings, leaving purchases at $65 billion. Gold plunged 28 percent in 2013, the most since 1981, partly as the prospect of less stimulus reduced demand for the metal as an inflation hedge. The cost of living rose at a slower pace in January, the government showed on Thursday.

Gold has climbed 9.5 percent this year as signs that the U.S. economy wasn’t recovering in line with expectations boosted demand for a haven. Some analysts are split on the outlook for prices. Gold has lost its luster and will decline to $1,011 in December as the Fed tapers and the dollar strengthens, Westpac Banking Corp. said today in a report. Holdings in exchange-traded products backed by gold declined 5.5 metric tons to 1,735.4 tons yesterday, data compiled by Bloomberg show. Assets fell 33 percent last year.

Palladium gained 0.1 percent to $736.30 an ounce on the New York Mercantile Exchange. Platinum declined 0.8 percent to $1,412.50 an ounce.

Industrial and base metals continue to trade on the downside after lackluster data yesterday weighed on the commodities. Copper continued to ease this morning to trade at 3.277. Copper futures fell to a one-week low after manufacturing shrank more than estimated in China and some Federal Reserve officials advocated further curbing of U.S. economic stimulus. China is the world’s biggest user. The government reduced this year’s target for expansion in factory output to 9.5 percent, compared with 10 percent last year.