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Singapore - Gold declined from the highest level in more than three weeks as investors assessed the timing of higher borrowing costs in the US after two Federal Reserve officials called for a slow approach to policy tightening, while others indicated otherwise.
Bullion for immediate delivery fell 0.6% to $1 248.74 an ounce at 08:50, according to Bloomberg generic pricing. The metal climbed to $1 262.79 on Tuesday, the highest intraday price since March 18, as investors tempered their outlook for the pace of interest-rate increases in the US, hurting the dollar.
Philadelphia Fed President Patrick Harker and Dallas Fed chief Robert Kaplan’s remarks Tuesday echoed Chair Janet Yellen’s call that policy makers should err on the side of caution, boosting expectations that officials won’t act when they meet on April 26 to April 27.
San Francisco Fed President John Williams said two to three rate rises in 2016 is reasonable. Gold has rebounded in 2016 after three years of losses amid expectations that US borrowing costs may stay lower for longer as the global economy falters.
“Fed officials have been giving mixed comments,” Madhavi Mehta, an analyst at Mumbai-based Kotak Commodity Services, said by email. “This could be an additional reason for a correction.”
Sustained gains in equity markets are also pressuring gold prices, Mehta said. Asian stocks climbed to a three-month high as Chinese trade data added to signs of a pickup in the world’s second-largest economy, supporting a rebound in commodities. Holdings in exchange-traded funds backed by gold climbed 1.3 metric tons to 1 765.7 tons on Tuesday, according to data compiled by Bloomberg.
Bullion of 99.99% purity on the Shanghai Gold Exchange traded 0.5% lower at $1 250.54 an ounce. Silver lost 0.8% to $16.0595 an ounce. Prices surged to $16.2142 on Tuesday, the highest level since October 28. Palladium rose 0.2%, while platinum dropped 0.5%.
