Gold tracked equities lower on Tuesday as investors took to the sidelines in quiet trading ahead of the release of minutes from the Federal Reserve's most recent policy meeting. The metal was on track to snap a two-day winning streak. The Fed minutes may provide clues on any potential quantitative easing. Gold has now erased most of its gains posted since late January when the Fed said it would keep interest rates near zero until 2014.
Trading volume was below normal for a second straight day and funds appeared uninterested in the gold trade as encouraging new orders for US factory goods and auto sales pointed to a better economic outlook. "The market is just not reacting right now. We are just going to continue to tread water until we break out of the $1,630-1,700 range," said George Nickas, a precious metals broker at commodities firm INTL FCStone.
Spot gold was down 0.2 percent at $1,673.49 an ounce by 1:15 p.m. EST (1715 GMT). It had gained as much as 2 percent prior to Tuesday's decline. US gold futures for June delivery were down $4.30 an ounce at $1,675.40. The minutes of the Fed's March meeting, due at 2 p.m. EDT (1800 GMT) are expected to offer further insight into how actively the central bank is considering additional steps to boost growth. Fed policymakers on Monday signalled little appetite for further monetary steps to stimulate US growth in an economy that is gradually strengthening.
Ultra-loose monetary policy helped send gold to record highs in 2011. But a recent raft of firmer-than-expected US economic data has curbed expectations for a fresh round of quantitative easing, which has put the brakes on gold's climb. "The gold market has recently been very sensitive to Fed statements, so it is likely to react to the news," BNP Paribas analyst Anne-Laure Tremblay said. "The apparent absence of physical demand, notably with the strike of Indian jewellers, has been weighing on prices."
Gold demand from India, the world's biggest buyer of bullion, remained sluggish as the prolonged strike by jewellers to protest excise taxes levied in the budget continued into a third week. Prices have fallen around 6 percent since expectations that the Fed would launch another round of asset-buying pushed gold to $1,790 at the end of February, its highest price since November.
Surging car sales, however, underpinned investor sentiment in industrial precious metals such as platinum, palladium and silver. US auto sales rose more than 15 percent in March as rising consumer confidence quickened the pace of a sluggish recovery. Spot silver was up 0.4 percent at $33.08 an ounce, spot platinum was up 0.6 percent at $1,653.49 an ounce, and spot palladium was up 1 percent at $656.97 an ounce.
Comments
Comments are closed.