Gold Posts First Weekly Decline in Three on Fed Taper Concern

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Gold fell, capping the first weekly drop in three weeks, on speculation that the Federal Reserve will curb monetary stimulus as the U.S. economy recovers, crimping demand for the metal as an alternative investment.

Policy makers trimmed bond purchases last week for the fourth time since November. Fed Chair Janet Yellen said May 7 that strength in the economy made measured reductions in asset purchases appropriate, even as stimulus is still needed. Bullion slumped 28 percent last year, the most since 1981, on concern the central bank would slow the pace of bond buying.

Gold futures for June delivery fell less than 0.1 percent to settle at $1,287.60 an ounce at 1:39 p.m. on the Comex, extending the week��s decline to 1.2 percent.

Prices are up 7.1 percent this year, partly because of escalating turmoil in Ukraine. The government in Kiev and its U.S. and European allies say President Vladimir Putin is fomenting unrest in eastern Ukraine, where pro-Russian separatists in the Donetsk and Luhansk regions are preparing to stage autonomy referendums May 11.

Source : Bloomberg