Gold Drops to Six Week Low on Central Bank Heavy Week

Gold traded near a six-week low in New York as investors weighed the case for the Federal Reserve to continue reducing stimulus against speculation the first monthly decline this year will increase physical demand.

Gold slipped 1.9 percent this month after U.S economic data including durable goods orders beat estimates, while Fed Chair Janet Yellen has said that the central bank’s debt-buying program may end this year with interest rates starting to rise in 2015. U.S. figures due tomorrow may show manufacturing strengthened this month.

The metal rose 70 percent from December 2008 to June 2011 as the Fed pumped more than $2 trillion into the financial system and cut interest rates to boost the economy. Gold still gained 7.8 percent this year, reaching a six-month high on March 17, as Russia’s annexation of Crimea spurred demand for a haven.

Prices have declined as “investors continued to scale back safe-haven bids and as U.S. economic data surprised to the upside,” Jonathan Butler, a precious metals strategist at Mitsubishi Corp. International (Europe) Plc in London, wrote in a report e-mailed today. “We look for the re-emergence of physical demand to keep gold reasonably well supported at these levels.”

Gold for June delivery added 0.1 percent to $1,296.10 an ounce by 7:36 a.m. on the Comex in New York. It reached $1,286.10 on March 28, the lowest since Feb. 12. Futures volume was 11 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Bullion for immediate delivery was little changed at $1,295.78 in London, according to Bloomberg generic pricing.

via Bloomberg

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