Gold dropped from a two-week high as investors awaited the release of Federal Reserve minutes that could provide hints on the possible direction monetary policy will take.
The Fed cut its stimuli injection by $10 billion to $55 billion at a meeting in March and its chair Janet Yellen said afterwards that the monetary regulator would end its bond-buying this year and hike interest rates in 2015. The precious metal lost 28% in 2013 as prospects for less bond-buying diminished its appeal as another way around inflation.
“The market is expecting reaffirmation from the Fed that the U.S. economy is showing strength, and that diminishes gold’s safe-haven premium. Today’s minutes will also indicate the Fed’s outlook on interest rates,” Newedge Group’s Tommy Capalbo told Bloomberg by phone.
June delivery gold futures dropped 0.3% to $1,305.50 per ounce as of 11:31 am in New York. On Tuesday, prices hit $1,314.70, a price not witnessed since March 26, as the dollar lost and tension in Ukraine resurged.
Poorly performing stock markets and geopolitical factors in Ukraine have bolstered the price of gold, letting the commodity trade back at more than $1,300 for every troy ounce. However, Eugen Weinberg of commerzbank’s said that the recent price hikes of gold benefited a great extent from speculative market participants, with physical demand in China not being so good of late.
Market analyst Andrey Kryuchenkov at London-based VTP Capital wrote on Wednesday that he did not expect gold prices to keep going up unless the dollar declined further or Ukraine tensions took a turn for the worse. He added that investors would focus more on the Federal Reserve minutes.
According to Marketwatch gold encounters resistance that fluctuates between $1,310 and $1,315, while the $1,278 is a healthy level.
In the meantime, platinum contracts for June lost 0.1% to trade at $1,440.90 an ounce on the Mercantile Exchange of New York.
To contact the reporter of this story; Jonathan Millet at email@example.com