Gold Pares Gains From Two-Week High on Renewed U.S. Rate Concern
Bloomberg - Mar 19, 2015
Gold futures climbed Thursday to their highest settlement price since March 5 after the Federal Reserve indicated that interest-rate increases would come at a gradual pace. April gold rose $17.70, or 1.5%, to settle at $1,169 an ounce on Comex.
Gold pared gains after reaching an almost two-week high amid renewed concern that the Federal Reserve will still raise U.S. interest rates, even as policy makers cut their outlook for borrowing costs.
Fed officials dropped a pledge to be “patient†in tightening policy in a statement Wednesday, even as they lowered their projections for rates by the end of the year. The dollar rebounded Thursday, climbing as much as 1.5 percent against 10 major peers, on speculation U.S. borrowing costs will rise as other economies stick with monetary easing.
Higher rates cut gold’s allure because the metal generally offers returns only through prices gains, sending investors to assets with better yield prospects such as bonds. Holdings in exchange-traded funds backed by the metal headed for the third straight weekly loss as investors exited gold in anticipation of an increase for borrowing costs.
“The Fed has indicated they are going to raise rates this year, even if they have not made it clear which quarter that will happen, and that’s bearish for gold,†Scott Gardner, who helps manage $450 million at Verdmont Capital SA in Panama City, said in an e-mail. “They will continue to assess data to decide on the timing.â€
Gold for immediate delivery climbed 0.3 percent to settle at $1,171.18 an ounce, according to Bloomberg generic pricing. Earlier, the metal rose to $1,177.96, the highest since March 6.
