Gold inched lower on investor anxiety ahead of the Federal Reserve’s policy meeting expected to offer insight to support speculation of a mid-2015 interest rate hike.
Gold for April delivery, the most active contract, pared Monday’s gains to slide 0.33% or $3.60 to $1150.10 an ounce on the Comex Division of the New York Mercantile Exchange.
The precious metal had earlier hit a low of 1143.50 despite settling higher for three straight trading sessions.
Spot gold slipped as low as 1,142.86 an ounce in morning trading, its lowest intraday price since November 7th, and was most recently 0.5% down at $1,147.85 an ounce.
Investors let go of holdings backed by gold in droves ahead of the Fed policy meeting. Holdings in products that are gold exchanged-traded fell for the 14th straight day on Monday-the longest run in more than 13 months.
Analysts polled by Bloomberg unanimously said that they expected Fed officials to pave the way for a summer interest hike by dropping the word ‘patient’ from the official policy statement due at the end of the meeting.
The best possible short-term outcome for the gold markets would be no change in the language after the FOMC meeting,” Richard Gotterer, managing director and senior financial adviser at Wescott Financial Advisory Group, told MarketWatch
“If that were to happen, I’d expect to see a slight pop in gold. But that’s not looking likely. Since the last Fed meeting, speeches from Fed officials have been geared towards getting the markets comfortable with the idea that sooner rather than later, they are going to hike rates,” he said.
Higher interest rates would severely dent bullion prices as alternative assets like gold do not pay any interest.
Investors expect gold to slip to a low of $1,058 after the interest hike with the expected continued surge by the dollar expected to undercut the prices if no interest yielding assets like gold.
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