Gold Bugs Refuse to Believe Taper Delay Has Any Life

Jacob Harper |

Gold continued its plunge Monday, continuing a drop that has continued largely unabated all month, save a significant one-day reprieve on Sept. 19.

On that day, the Federal Reserve announced they would not be tapering the $85 billion a month bond-buying program known as QE3. The precious yellow metal shot up on the concrete news from the Fed, gaining nearly five percent in 10 minutes, and ending the day up 4.5 percent for its biggest intraday gain in four and a half years.

Never one to be swayed for too long on actual data, gold’s rebound was tamped down the very next day by speculation. In this case, that speculation came from influential St., Louis Fed Chairman James Bullard, who iterated his opinion that the taper could still come as soon as that month. On Sept. 23 Federal Reserve Bank of New York President William Dudley added to the speculation, saying that the plan to eventually taper is "still very much intact,"

Gold dropped on Sept. 20, losing 2.7 percent and erasing over half of the gains made the day prior. That pessimism on the yellow metal has bled into this week, as investors refuse to believe the continuance of present-level QE3 can last. This pessimism countered another bit of concrete data, as the HSBC reported that manufacturing activity in China hit a six-month high.

On Dudley's remarks, December gold dropped .77 percent to settle at $1,322 an ounce. Gold has lost almost a third of its value this year.    

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