Gold hit by profit-taking

The price of gold is hovering above $1300 as traders lock in their profits from the recent positive run.

Gold is trading at $1303, broadly unchanged on the day, as the reversal of the flight to quality and fears of tapering from the Federal Reserve are keeping the precious metal close to the key $1300 level.

The increased anxiety in eastern Ukraine drove the metal above the $1330 mark at the start of the week, and as there have been no further developments we have seen some traders take their money off the table.

The increase in the US consumer price index yesterday sparked fears the US would reduce its stimulus package. The bond buying scheme by the US central bank has helped the jobs market, but now that the cost of living is increasing it could be an indication of tapering.

The $1300 level has been a major support level for gold, as I previously mentioned. If hostilities rise again between Russia and the west, gold could move towards the 50-day moving average of $1326.

Spot gold chart

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