Gold declined for a second day, retreating from the highest price in more than six months, as better-than-estimated U.S. factory production data curbed haven demand before the Federal Reserve meets today.
Bullion for immediate delivery lost as much as 0.7 percent to $1,357.13 an ounce and traded at $1,359.05 by 9:58 a.m. in Singapore. Prices climbed to $1,392.22 yesterday, the highest since Sept. 9, before closing 1.2 percent lower. Gold for April delivery dropped 1 percent to $1,359.40 an ounce on the Comex.
U.S. industrial output rose in February by the most in six months, showing manufacturing may help the economy emerge from a weather-related setback. The Federal Reserve starts a two-day meeting today and will further scale back its bond-buying program, according to a Bloomberg survey. Gold gained 13 percent this year as turmoil in Ukraine and slowing growth in China, the largest consumer, increased demand for wealth protection.
“We’re seeing a little bit of the risk premium coming off the table,” Victor Thianpiriya, an analyst at Australia & New Zealand Banking Group Ltd., said by phone from Singapore. “The market expectation for QE is that they’re essentially on autopilot, they’ll cut by $10 billion at every meeting,” he said, referring to U.S. central bank’s quantitative easing.
The Fed will cut monthly bond purchases by $10 billion to $55 billion and continue reductions at that pace at every meeting before announcing an end to the buying at its Oct. 28-29 gathering, according to the median of responses in the March 14-17 survey. Policy makers at each of their prior two meetings had cut monthly purchases by $10 billion.
European Union foreign ministers agreed yesterday to freeze assets and impose visa bans on 21 Russians and Crimeans, while the U.S. put similar sanctions on seven Russian government officials and four Ukrainians, including former President Viktor Yanukovych. About 97 percent of voters in Crimea chose to leave Ukraine and become part of Russia in a referendum deemed illegal by the U.S. and EU.
Assets in the SPDR Gold Trust, the biggest bullion-backed exchange-traded product, decreased 0.5 percent to 812.78 metric tons yesterday, data from the fund’s website showed. Holdings rose 1.8 percent this year after plunging 41 percent in 2013.
Silver for immediate delivery dropped as much as 1 percent to $20.9765 an ounce and traded at $21.0331. Platinum fell 0.3 percent to $1,461.88 an ounce, while palladium declined 0.2 percent to $771.18 an ounce.