Gold traded near its lowest in three weeks on Thursday after Federal Reserve policy makers signaled an increase of the bank’s interest rates in the next six months.
Gold futures for April delivery dropped 0.76% lower to $1,331.20 an ounce at the time of writing, while silver futures edged 0.95% lower to $20.630 an ounce at the same time.
Holdings in the world’s largest bullion-backed exchange-traded fund, SPDR Gold Trust; came in at 812.78 tons on Wednesday.
Gold – Fed Statement
On Wednesday, the Federal Open Market Committee concluded their two-day monthly policy meeting and said it will look at a range of data to determine whether to increase its benchmark interest rate from zero, as the inflation continues to drop below-target.
According to the minutes from the March meeting, Fed policymakers forecasted the benchmark rate, would increase by at least 1% by the end of 2015 and by 2.25% by the end of 2016, as the US central bank announced a further reduction to its monthly bond purchases by another $10 billion to $55 billion.
“The market spilled on the prospect of rates being raised as early as March 2015; something none seem to be positioned for. The end of the asset-purchase program is open-ended and also open to interpretation. On current form, it could be completely unwound in October,” market strategist at IG Evan Lucas wrote in a note.
In China, the world largest gold consumer; volumes for the benchmark spot contract in Shanghai climbed to its highest in three weeks on Wednesday, as metal of 99.99% purity traded $3.95 an ounce.
Gold – Ukraine
The yellow metal climbed by 10% this year as the tension in Ukraine boosted demand for a haven. Ukraine said it plans to withdraw its troops from Crimea, as the leaders of the European Union are expected to meet in Brussels later in the day to discuss further sanctions on Russia for the annexation of the Black Sea peninsula.
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