Gold prices fell below $1,580 as traders took to the sidelines ahead of the release later on Wednesday of minutes from the Federal Reserve's last policy meeting. Softer investor confidence in the metal after a fresh outflow from the world's largest gold exchange-traded fund and a further forecast cut from Goldman Sachs weighed on prices.
Spot gold was down 0.5 percent at $1,574.05 an ounce at 1408 GMT, while US gold futures for April delivery were down $12.60 an ounce at $1,574.20. The precious metal traded in its widest weekly range since mid-February last week, sliding to a 10-month low at $1,539.74, as funds favoured other assets such as equities, before rebounding sharply on the back of weak US jobs data.
"Precious metals are suffering from lower liquidity in the market today," Adrien Biondi, head of precious metals trading at Commerzbank, said. "Although the impact from the FOMC minutes should be limited, some still expect more hawkish comments from the Fed and this is unnerving investors." The Fed is due to release minutes of its March 19-20 meeting at 1800 GMT. They will be closely watched for signs of any change in attitude towards its stimulus package, which has driven gold higher by undermining confidence in the dollar and keeping interest rates at rock bottom.
"Investors will be mainly scouring the minutes for any new indications of when QE3 might be terminated, or of any significant reduction in the bond purchasing volume," Commerzbank said in a note. Goldman Sachs cut its 2013 gold price forecast for the second time in six weeks, to $1,545 an ounce from $1,610, a day after UBS cut back its price view for this year. It is targeting a gold price of $1,450 an ounce by year-end, it said.
"Despite resurgence in Euro area risk aversion and disappointing US economic data, gold prices are unchanged over the past month, highlighting how conviction in holding gold is quickly waning," it said in a report. "With our economists expecting few ramifications from Cyprus and that the recent US slowdown will not derail the faster recovery they forecast in (the second half of 2013), we believe a sharp rebound in gold prices is unlikely."
The world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, reported a further outflow from its gold holdings on Tuesday of just under five tonnes, bringing its outflow for the year to more than 150 tonnes. Gold-backed ETFs tracked by Reuters have recorded outflows of 195 tonnes so far this year. Silver was down 0.7 percent at $27.74 an ounce. The metal rallied 2.5 percent on Tuesday, its biggest one-day rise since mid-February.
The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, pulled back from last week's eight-month high as silver outperformed. An ounce of gold now costs 56.8 ounces of silver, down from 57.9 on Friday. Palladium fell to its lowest in three months, under heavy selling pressure in an overly long market, traders said, with liquidation picking up as it broke through key chart levels.
Spot palladium was down 1.6 percent at $711.86 an ounce, having fallen as low as $702.97. Spot platinum was down 1 percent at $1,532.49 an ounce. "What we are also seeing in platinum and palladium is a fairly extended futures and options positioning and this is a risk for the market because investors can now reduce positioning as they have been so long," Credit Suisse analyst Karim Cherif said.
Comments
Comments are closed.