Gold’s tendency to fluctuate dropped to a low last posted 44 months ago ahead of the conclusion of a two-day Federal Reserve meeting.
The volatility for the last 60 days slumped to 11.4, the lowest since October 2010, data from Bloomberg showed. Gold contracts exchanged within the range of $45 per ounce this month. The precious metal traded at $74 in May.
The valuation of exchange-traded funds which are supported by gold has plunged by $2.57 billion this quarter. Comex futures’ open interest declined to a five-year low in April. Gold’s attractiveness as a safer investment option slid as US stocks soared to a record and the fed tapered its bond purchase program.
“There is very little interest in gold as the equity market continues to march ahead. Many people are steering clear of gold because they know that tapering will continue,” James Cordier of Tampa, Florida-based Optionsellers.com told Bloomberg.
The per ounce price of August-delivery futures added less than 0.1% to trade at $1,272.50 as of 12:32 on the Comex in New York. The price dropped 0.35 on Tuesday, to halt a six-session run, the longest since February.
On June 16, the precious metal hit $1,285.10, the highest since May 27, as the spread of mayhem in Iraq and deteriorating relations between Ukraine and Russia fueled haven demand.
The Federal Open Market Committee reduced bond purchases at every of its past four meets as the economy improved. The fed may on Wednesday decide to cut asset purchases by a further $10 billion.
According to Reuters, Tuesday data showing a high inflation rate indicated the likelihood that policy makers may also hike the central bank’s core interest rate earlier than investors anticipate. A hike in interest rates would push the dollar higher and exert pressure on dollar-backed commodities, including gold.
Spot gold plunged 0.07% by 1403 GMT.
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