* FOMC minutes dash hopes of further stimulus
* Spot gold could fall to $1,631/oz – technicals
* Coming up: U.S. ADP Employment report, March; 1215 GMT
(Adds details, comments; updates prices)
By Rujun Shen
SINGAPORE, April 4 (Reuters) – Gold edged lower on
Wednesday, extending a nearly 2 percent tumble in the previous
session, as the minutes of the U.S. Federal Reserve’s last
policy meeting showed diminishing appetite for further monetary
stimulus.
Expectations of another round of quantitative easing had
boosted gold’s appeal as a hedge against inflation and pushed
prices to $1,790.30 in February, the highest level since last
November.
Policymakers at the U.S. central bank believed that the
gradually improving economy has lessened the need for more
monetary easing, even though they remained cautious about a
broad pickup in economic activities.
The minutes came just a week after Fed Chairman Ben Bernanke
hinted at the possibility of further stimulus, which drove
stocks and commodities higher and cut the yields in U.S.
Treasuries.
“Everything is linked through the phenomenon of massive cash
supply from central banks,” said a Singapore-based trader. “The
minutes seem to support a view that the Fed is not going to pump
more and more cash into the markets.”
Spot gold edged down 0.1 percent to $1,642.60 an
ounce by 0344 GMT, after posting its biggest one-day decline in
three weeks. Prices dropped below $1,640 on Tuesday.
U.S. gold dropped 1.7 percent to $1,644.40, tracking
weaker spot prices.
A firmer dollar, which hit a one-week high against a basket
of currencies, also weighed on commodities priced in the
greenback.
“The US economy seems to be somewhat on its own in terms of
growth ‘ramp-up’ just as Europe nears recession, while China’s
growth remains suspect despite this weekend’s stronger PMI
number,” said INTL FCStone analyst Ed Meir in a research note.
“This means that the dollar will likely push higher from
here, not necessarily a fertile backdrop for either metal (gold
or silver).”
U.S. Treasuries had their largest selloff in three weeks on
Tuesday as the Fed officials disappointed the market that had
expected more bond purchasing and persistently low real interest
rates.
Adding to evidence on improving U.S. economy, new orders for
U.S. factory goods rebounded in February and firms increased
orders for capital goods.
PHYSICAL BUYING
The sharp drop in prices attracted some physical buying
interest from bullion dealers in Asia, though Hong Kong and
China are closed for a public holiday, dealers said.
“Prices below $1,640 are still attractive to physical
buyers,” said a Singapore-based dealer, but added that India’s
imports remained depressed due to the ongoing jeweller strike.
Platinum group metals held up relatively well during the
sell-off on Tuesday, on strong U.S. auto sales data.
Spot platinum was little changed at $1,634.74, and
spot palladium inched down 0.1 percent to $647.72.
Gold’s premium over platinum has narrowed to below $10 from
nearly $45 last week, as platinum outstripped gold on weekly
performance charts.
Precious metals prices 0344 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1642.60 -2.23 -0.14 5.04
Spot Silver 32.30 -0.32 -0.98 16.65
Spot Platinum 1634.74 -0.11 -0.01 17.35
Spot Palladium 647.72 -0.88 -0.14 -0.73
COMEX GOLD JUN2 1644.40 -27.60 -1.65 4.95 10356
COMEX SILVER MAY2 32.31 -0.96 -2.89 15.73 3205
Euro/Dollar 1.3195
Dollar/Yen 82.71
COMEX gold and silver contracts show the most active months
(Editing by Himani Sarkar)
