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Singapore - Gold dropped ahead of the release of the Federal Reserve’s minutes from its July meeting after central bank officials signalled that US interest rates could be increased at least once this year.
Bullion for immediate delivery fell as much as 0.4% to $1 340.89 an ounce and traded at $1 343.82 at 09:46 as the dollar rose, according to Bloomberg generic pricing. The metal has climbed 27% this year, and earlier on Wednesday had traded higher before reversing as the US currency rebounded.
Gold has advanced in 2016 as the Fed has yet to add to last year’s rise, which was the first in almost a decade.
New York Fed President William Dudley warned investors they are underestimating the likelihood of increases, and Atlanta Fed chief Dennis Lockhart said he’s confident growth is accelerating, setting the stage for one or two rises this year. The comments boosted the probability of a hike in December to 51%.
“Gold is trading lower today on position-squaring ahead of FOMC minutes,” Madhavi Mehta, an analyst at Mumbai-based Kotak Commodity Services, said in an email. “Yesterday’s selloff in the US dollar and the rise in gold price showed confidence that the Fed may maintain a cautious tone on rate hike. However, comments from two senior Fed officials challenged the notion.”
The minutes of the Federal Open Market Committee’s July policy meeting are due for release on Wednesday at 20:00.
Newcrest Mining fell as much as 5.7% in Sydney trading Wednesday, headed for the lowest close in three weeks. Evolution Mining declined as much as 6.4%, and Northern Star Resources dropped as much as 3.8%.
Holdings in bullion-backed exchange traded funds added 5.25 metric tons to 2 032.9 tons on Tuesday, data compiled by Bloomberg show. In China, bullion of 99.99% purity fell 0.3% to $1 346.94 an ounce on the Shanghai Gold Exchange.
On the Shanghai Futures Exchange, gold for December delivery lost 0.4% to 287.80 yuan a gram, while silver dropped 0.8% to 4 375 yuan a kilogram. Silver fell 0.3%, platinum lost 0.3% and palladium declined 0.9%.
