• Gold hit a more than three-week low on Wednesday as the dollar firmed on expectations of a US interest rate increase in June and the market discounted a surprise win by France’s far-right presidential candidate.
• The US Federal Reserve is expected to hold interest rates steady after concluding its two-day meeting on Wednesday, but it might focus on future rate hikes, which would reduce demand for noninterest-bearing gold.
• Spot gold was down 0.8 per cent at $US1,246.76 an ounce by 2.58 pm Wednesday EDT (0458 Thursday AEST), after falling below the 50-day and 200-day moving averages and touching its lowest since April 5 at $US1,244.93. US gold futures settled down 0.7 per cent at $US1,248.50.
• The dollar firmed 0.16% at 99.132 against a basket of major currencies.
• Gold prices tumbled as investors digested a bullish statement from the U.S. Federal Reserve, which described weak Q1 growth as “transitionary.” Spot gold on Kitco.com was trading at $1,237.80 during the opening hours of the Asian session, after briefly touching a low of $1,235.60 earlier.
• “[The statement said] that the slowing in growth over the first quarter appears to be transitory, and that the fundamentals underpinning healthy growth in consumption remain in place. The committee members didn't signal any additional concern that the recent cooling in prices was much of a risk to reaching their inflation mandate,” senior economist at CIBC World Markets, Royce Mendes, said in a note. “The language appears to keep the door wide open to a June rate hike, if the data cooperates,” Mendes added.
• European stocks hovered near 20-month highs after strong gains this week on forecast-beating company earnings and signs of global economic strength.
In the French elections, the top two presidential rivals go head-to-head on Wednesday in a televised debate in the last encounter before Sunday’s run-off in which opinion polls predict a win by centrist Emmanuel Macron.
Fears that far-right candidate Marine Le Pen could sweep to a surprise victory had buoyed gold in recent sessions due to its safe-haven appeal.
• "Attention will now turn to Friday's payrolls to get the ball rolling on that front," said Royce Mendes, director and senior economist at CIBC Capital Markets in Toronto.
• In other precious metals, spot silver was on track for its most technically oversold level on the 14-day relative strength index since November 2014. It was down 1.4 per cent at $US16.567 per ounce, after touching the lowest since January 11 at $US16.48.
Reference: Reuters, Kitco, Business News
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