Wednesday, September 11th 04:34 PM IST

News Update: Gold Fields under US SEC investigation, expect Gold to fall on Fed taper

# Gold Fields  # South Africa  # gold  # Fed tapering  

Analysts have turned gloomy on gold outlook as US Fed goes ahead and begins tapering of its securities purchases. Bank of America, Goldman Sachs, Societe Generale SA, Citigroup Inc are among those who expect lower gold prices in 2014 while JPMorgan Chase & Co, Bank of America Corp are among those who expect bottoming out of gold on robust demand.

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LONDON (Bullion Street): South Africa's second biggest gold producer by revenue, Gold Fields is being investigated by the US Securities and Exchange Commission (US SEC) over a $120 mn black emplowerment deal involving a senior member of the ruling party, Reuters reported.

The proble involves a 2010 deal and the granting of a mining licence for its South Deep mine near Johannesburg.The 2.1 billion rand ($210 million) transaction saw Gold Fields give a 9 percent stake in South Deep to a group of black investors to meet government targets for black economic empowerment (BEE), including black ownership.The ruling African National Congress has championed BEE to redress the inequalities left by white-minority rule, which ended in 1994.

The South Deep deal has come under particular scrutiny because the beneficiaries include ANC chairwoman Baleka Mbete, as well as relatives of anti-apartheid heroes including Nelson Mandela, Reuters report added.

Gold outlook gloomy on likely Fed tapering
Analysts have turned gloomy on gold outlook as US Fed goes ahead and begins tapering of its securities purchases. Bank of America, Goldman Sachs, Societe Generale SA, Citigroup Inc are among those who expect lower gold prices in 2014 while JPMorgan Chase & Co, Bank of America Corp are among those who expect bottoming out of gold on robust demand.

Meanwhile, Bloomberg quoting analysts said that next week’s FOMC meeting would represent the first step in a tightening of the Fed’s monetary policy. An increase in interest rates, or even the promise of increased interest rates demonstrated by tapering bond purchases, would depress gold prices because “rates represent opportunity costs of holding gold,” wrote BofAML metals strategist Michael Widmer in a note. The Fed currently buys $85 billion in mortgage and Treasury debt each month.

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