2013.08.0707:17:25UTC+00Gold continues to decline on tapering fears

Gold prices continues to decline into a seventh consecutive day Wednesday, marching further away from the key $1,300-an-ounce level as the outlook for financial-stimulus tapering strengthened.

Gold for December delivery relinquished $4.20, or 0.3%, to $1,278.30 an ounce in electronic trade.

That followed Tuesday’s decline of $19.90, or 1.5%, on the New York Mercantile Exchange, with losses accelerating after two Federal Reserve officials said they expect the central bank to reduce its asset purchases this year from their current $85 billion a month because of economic progress.

Stimulus from the Fed has been seen as a benefit for gold prices.

Mostly bullish recent U.S. data have “deterred investors from creating new longs,” or bets for higher gold prices, VTB Capital analyst Andrey Kryuchenkov told clients on Tuesday.

There’s also been liquidation on exchange-traded funds’ long positions, “with only opportunistic buying on the lows in the past week, while physical flows still exert a subdued influence on prices,” he said.

Chicago Fed Bank President Charles Evans said Tuesday the Fed is “quite likely” to begin slowing the pace of monthly bond buying by year’s end. Separately, Atlanta Fed Bank President Dennis Lockhart said tapering of monetary stimulus, or quantitative easing, could be announced at any of this year’s remaining policy meetings.

But the July U.S. employment report last week showing the economy added a less-than-expected 162,000 jobs also created uncertainty about the tapering timeframe, as weakness in the labor market suggested to many that the economy remains in need of monetary aid from the Fed.

The September meeting is “still looking like a good starting place” to begin tapering efforts, said Kryuchenkov. “In any case, the upside in gold will be particularly limited if numbers continue to improve, while [quantitative-easing] uncertainty will fuel further jittery trading ahead of the autumn.”

The week’s lineup of Fed speeches continues Wednesday, with remarks due from Philadelphia Fed President Charles Plosser and Cleveland Fed President Sandra Pianalto.

A gain in the U.S. dollar against most major rivals also put pressure on dollar-denominated gold futures Wednesday.

Elsewhere in the metals complex Wednesday, October platinum slumped $3.50, or 0.3%, to $1,424.30 an ounce.

September copper missed 2 cents, or 0.6%, to exchange at $3.15 a pound, and September palladium relinquished 95 cents, or 0.1%, to $721.85 an ounce.