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Gold recorded its first annual loss in 12 years in 2013 and the commodity finished the year just above the $1200 mark, but dealers hunting for bargains and investors switching their funds from equities to metals ensured that the precious metal got off to a good start in 2014. After an upward trend since the start of the year, it is not unusual to see to corrections from time to time.
The Federal Reserve’s monetary policy has had a big impact on the price of gold; investors started to sell last summer as they felt the Fed would reduce the bond buying scheme in Autumn. Tapering wasn’t announced until December but already there is speculation of additional tapering, which may be having a knock-on effect on gold.
Jon Hilsenrath of the Wall Street Journal has speculated that the stimulus could be reduced by an additional $10 billion per month by the end of January. If this were to happen we could see gold head towards the $1200 level.