Gold to Sell Off as QE3 Fizzles

Economist Shayne Heffernan takes a look at the Gold Price

Gold Prices will decline for a second day on opinion that the U.S. Federal Reserve will not add additional stimulus QE3 amid signs the world's largest economy will not benefit from any such action.

Our traders report that immediate-delivery gold was little changed at $1,657.90 in Singapore, poised for a third monthly gain.

December-delivery gold fell as much as 0.4 % to $1,656.70 an ounce on the Comex, and was at $1,660.30. Gold is poised to decline for a second day on opinion that the U.S. Federal Reserve will refrain from additional stimulus amid signs the world's largest economy is improving.

Spot Gold was little changed at $1,657.90 an ounce in Asian hours , poised for a third monthly gain. December-delivery gold fell as much as 0.4 % to $1,656.70 an ounce on the Comex, and was at $1,660.30.

The U.S. economy grew at a 1.7 % annual rate in the second quarter, up from an initial estimate of 1.5 %, data showed yesterday. The Fed said yesterday in its Beige Book survey that the economy continued to expand "gradually" in July and early August.. Gold has risen 2.7 % this month and is set for the biggest gain since January.

As the recent rally has been based on false hope of QE3, we expect a sell off on Friday/Monday at which point Gold will become a bargain.