MTS Help Center

Gold dropped for a third consecutive session on Tuesday to its lowest in almost two weeks, with investors focused on the upcoming U.S. Federal Reserve policy meeting.

A rise in global equity markets over the past few days has provided headwinds to the gold market, which has gained around 16 percent this year.

The yen advanced against the dollar and Asian stocks languished near the day's lows on Tuesday, after the Bank of Japan held policy steady as expected and offered a bleaker view of the country's economy in the face of lingering anxiety over slowing global growth.

Spot gold dropped 0.5 percent to 1,228.56 an ounce by 0649 GMT, while U.S. gold slid 1.3 percent to $1,229.10 an ounce. Spot gold earlier in the session fell to $1,225.70 an ounce, its lowest since March 2.

"We are waiting for the outcome of the Fed meeting and data coming from the United States is showing that the state of the economy is not bad," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers Ltd.

"I think there are too many long positions in the market. They are taking some profit."

US dollar strengthened before U.S. Federal Reserve meeting this week, sending gold priceand most of G10 currencies lower today. Gold touched down on a support trend line, whose break would spell trouble to the January-March climb. The downside of gold will continue to be tested up to the event’s outcome.

Commodity price slump weighed on mining shares and that in turn dampened metal prices. Last week’s rally in copper price did not last long given weak market fundamentals. Physical demand in China remains weak while copper inventories monitored by the Shanghai Futures Exchange hit a record high recently.

Oil priceretreated for the first time in a week, likely due to profit-taking at the peak of the rally, Iran’s refusal to contain output, and OPEC growth revision. Iran reiterated its intention to boost daily production to 4 million barrels, casting more doubt on afragile output freeze accord. OPEC downgraded GDP forecast to 3.1% from 3.4% amid pressured oil prices.

GOLD TECHNICAL ANALYSIS – Gold price parked on the support trend line today as downward pressure intensified ahead of major event risk this week. An uptrend signal in moving averages also dissolved. Traders should be mindful and prepared for a breach of support level.

Reference : Reuters, DailyFX