Gold slips 1% as stocks and dollar recover some losses
london — Gold fell one per cent on Wednesday as a recovery in equities and the dollar prompted some profit-taking after Tuesday’s rally, though price moves were muted as traders awaited the minutes of the US Federal Reserve’s last policy meeting.
The minutes, due to be published at 1800 GMT, will be scrutinised for clues on the outlook for US monetary policy and any signs of dissent over the central bank’s decision to leave interest rates on hold at its March meeting.
Gold, which is sensitive to rate increases because they lift the opportunity cost of holding the non-interest-yielding metal, posted its biggest quarterly rise in nearly 30 years in the first three months of 2016 as expectations for rate rises faded.
The metal rose 1.8 per cent on Tuesday as equity markets sold off, fuelling interest in gold as an alternative asset, but it has since declined as stocks recovered in Europe.
Spot gold fell by one per cent to $1,218.86 an ounce at 1203 GMT, with US gold futures for June delivery down $9 an ounce at $1,220.60.
“The precious metal has eased off today as investors have their focus back towards equity markets,” Ava Trade’s chief market analyst Naeem Aslam said. “However, what is significant is the upcoming FOMC meeting minutes today.”
“The FOMC committee needs to show solidarity with respect to a rate hike, and as long as we are lacking that, their message will be vague and spawn more volatility.”
US Fed Chair Janet Yellen sparked a rally in gold late last month after saying that the central bank should remain cautious about further rate rises, but recent hawkish comments have capped gains in the market.
Boston Federal Reserve President Eric Rosengren and Chicago Fed President Charles Evans indicated this week that the market view about rate rises was pessimistic.
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