Gold Ends Sharply Lower On Profit Taking, But Gains 1.8% For Week

(RTTNews) - Gold futures plunged to end sharply lower Friday, mostly on profit taking after gaining a near five percent yesterday on the Federal Reserve's decision against scaling down its $85 billion monthly bond-buying program earlier in the week. News that India, the world's biggest gold consumer, will restart import of the precious metal did little to change the sentiment. Nevertheless, gold futures gained 1.8 percent for the week.

Investors mulled over prospects of a possible tapering to the stimulus program in October, after St. Louis Fed President James Bullard on television said the central bank may consider scaling down its asset purchase program in October if the economy showed any significant signs of recovery.

Gold for December delivery, the most actively traded contract, plummeted $36.80 or 2.7 percent to close at $1,332.50 an ounce Friday on the Comex division of the New York Mercantile Exchange.

Gold for December delivery scaled an intraday high of $1,368.40 and a low of $1,327.20 an ounce.

Yesterday, gold soared over 4.7 percent after the Federal Reserve in its policy statement maintained its $85 billion bond purchase program intact.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, moved up to 912.00 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.41 on Friday, up from 80.35 late Thursday in North American trade. The dollar scaled a high of 80.58 intraday and a low of 80.30.

The euro traded slightly higher against the dollar at $1.3531 on Friday, as compared to its previous close of $1.3529 late Thursday in North America. The euro scaled a high of $1.3550 intraday and a low of $1.3500.

In economic news, the U.K. budget deficit narrowed slightly more than expected in August, suggesting that economic recovery started to usher in positive developments in public finances. Data from the Office for National Statistics on Friday showed public sector net borrowing, excluding temporary effects of financial interventions, at GBP 13.2 billion-- which is below the GBP 14.4 billion borrowing seen during the same period of last year. The deficit was expected to decline to GBP 13.3 billion.

Meanwhile, International Monetary Fund Chief Christine Lagarde said global economic growth remains subdued despite signs of recovery in the U.S., emphasizing that economies are moving at different speeds. The stake of U.S. in the global recovery is greater than ever in a world of increasing economic interconnections, Lagarde said in a speech to business leaders at the U.S. Chamber of Commerce in Washington, D.C on Thursday.

Ahead of the release of the next World Economic Outlook on October 8, Lagarde underscored the interplay between the global economy and the U.S. economy and the importance of job creation.