09/04/2014 15:44 AST
Gold fell from the highest price in almost two weeks in New York before the U.S. Federal Reserve releases minutes of its March meeting that may give clues on the outlook for the central bank's monetary policy.
Gold rose 0.8 percent yesterday as the Bloomberg Dollar Spot Index, a measure against 10 major currencies, reached the lowest since October and tension over Ukraine spurred demand for a haven. Pro-Russian activists released most of their hostages in Ukraine's eastern city of Luhansk today after U.S. Secretary of State John Kerry accused Russia of using "special forces and agents" to fuel unrest.
The Fed reduced monthly bond purchases by $10 billion to $55 billion at its March meeting and releases minutes of that gathering later today. Chair Janet Yellen said last month the central bank may start to increase interest rates "around six months" after ending its asset-buying program. Gold slid 28 percent last year, partly on concern that stronger U.S. growth would mean less monetary stimulus.
"We do not see much more upside here unless the dollar tumbles even more or Ukraine tensions escalate once more," Andrey Kryuchenkov, an analyst at VTB Capital in London, wrote today in a report. "Market participants will pay some attention" to the Fed minutes, he said.
Gold for June delivery fell 0.4 percent to $1,304.10 an ounce by 7:47 a.m. on the Comex in New York. It reached $1,314.70 yesterday, the highest since March 26. Futures volume was about the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Bullion for immediate delivery declined 0.4 percent to $1,303.83 in London, according to Bloomberg generic pricing.
ETP Holdings
Holdings in gold-backed exchange-traded products declined to the lowest level in more than a month yesterday, data compiled by Bloomberg show. UBS AG held its 2014 gold forecast at $1,300 today, adding that Fed policy expectations provide a "ceiling" for prices, while physical demand and a need to insure against tail risks offer support to the metal.
"Gold will hold around the $1,300 region -- that does appear to be where natural demand seems to be pushing prices back to," David Lennox, a resource analyst at Fat Prophets in Sydney, said by phone today. "But that also is subject to U.S. growth numbers."
Silver for May delivery fell 1.5 percent to $19.755 an ounce in New York. Platinum for July delivery lost 0.3 percent to $1,437.90 an ounce. Palladium for June delivery was little changed at $775.90 an ounce.
Palladium climbed to $802.45 on March 24, the highest since August 2011, on concern that supplies would be disrupted from Russia, the biggest producer. Kerry said yesterday that additional sanctions targeting Russia's energy, banking and mining industry are "all on the table" if it intervenes further in Ukraine.
Bloomberg
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