Gold declined as analysts brought closer projections for the Federal Reserve to hike interest rates, shrinking demand for the metal as an inflation haven.
Goldman Sachs Group Inc. brought forward its projection for the central bank to increase interest rates to the third quarter of 2015, as opposed to the first quarter of 2015, attributing the revision to improved rate of economic growth. JP Morgan Chase & Co. and Bank of Tokyo-Mitsubishi UFG Ltd had already brought forward their estimates. The fed has maintained its key lending rate at near 0% since December 2008.
Bullion soared for five weeks in a row as fed policy makers announced after their June meeting that rates will be kept low for a substantial period of time. The precious metal declined 28% last year on worries that the US central bank would tapper its bond purchase program as the economy revamped.
“Perception of an early rate hike is very damaging for gold. The sentiment is turning negative,”Blake Robben of Chicago-based Archer Financial Services told Bloomberg in a phone interview.
The per-ounce price of gold futures for delivery in August sank 0.3% to $1,316.60 as of 12:37 on the Comex in New York. Future traded were 38% below the average for the last 100 days at the particular time of the day.
The metal surged to $1,334.90 on July 1, a price that a most-active contract has not registered since March 24.
“From a momentum and technical perspective, gold is looking much better and this should lead to an uptick in demand,” Mark O’Byrne of Dublin-based GoldCore is quoted by MarketWatch as saying.
There is an ongoing stakeholder gathering hosted by the World Gold Council in London today to deliberate on likely alterations to the London gold fixing benchmark, which is 100 years old and used by mining firms to central banks to exchange and value the metal.
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