Gold traded near the lowest in almost three weeks as investors weighed the US Federal Reserve's indication that it will raise interest rates next year against the crisis over Ukraine. Silver declined.
Bullion fell 1.9 percent yesterday as US policy makers cut monthly bond-buying by $10 billion and said they will slow purchases in "further measured steps." Central-bank officials estimated the benchmark rate target will be 1 percent at the end of 2015 and 2.25 percent a year later. That compares with their December estimate of 0.75 percent and 1.75 percent. The dollar traded near a three-week high versus 10 major currencies.
Gold climbed 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. Prices, up 11 percent this year, reached a six-month high of $1,392.22 an ounce on March 17 as turmoil over Ukraine left Russia and the West embroiled in their worst confrontation since the Cold War.
The Fed's tone "was interpreted as being slightly more hawkish than expected, contributing to a sharp rise in the dollar and pressuring gold," Edward Meir, an analyst at INTL FCStone Inc. in New York, said in a report written yesterday. "Gold will likely regroup and push higher once the Ukrainian crisis moves on to a more serious stage."
Bullion for immediate delivery added 0.2 percent to $1,332.33 by 8:42 a.m. in London. It reached $1,325.66 today, the lowest since Feb. 28. Gold for April delivery declined 0.7 percent to $1,332.40 on the Comex in New York, where futures trading volume was 28 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg showed.
The US central bank discarded a jobless-rate threshold for considering when to increase borrowing costs and said it will look at a wider range of data. Fed Chair Janet Yellen sees a "considerable time" between the end of the stimulus and the first rate increase, meaning "around six months or that type of thing," she said at a press conference after presiding over her first policy meeting.
Ukraine said it plans to reinforce its eastern border with Russia and withdraw troops from Crimea, ceding control of the Black Sea peninsula as tensions remained high over Russian moves to annex the breakaway region. Russian President Vladimir Putin's takeover of Crimea has set off the worst confrontation in two decades with the West, which is struggling to respond. European Union leaders meet today to try to formulate a unified position on punishing Russia.
Silver for immediate delivery fell 1.2 percent to $20.3757 an ounce in London, reaching $20.3368, the lowest since Feb. 13. Platinum lost 0.1 percent to $1,445.47 an ounce. Palladium slipped 0.9 percent to $756.50 an ounce. Prices reached a one- year high of $785.75 on March 14.