Gold continued to ease throughout the day giving up $10.50 to trade at 1264.80. Gold price fell further from a three-week high as investors withdrew money from the top bullion fund at the fastest pace in two months and as markets nervously waited for a Federal Reserve meeting this week. The metal’s fall comes even as most stock markets fell on the deepening conflict in Iraq and a gas dispute between Ukraine and Russia sapped investors’ appetite for riskier assets.
The Fed’s two-day policy meeting begins later in the day with a statement expected on Wednesday. Markets are on the watch for any signals on when the central bank might begin raising interest rates. Investor sentiment was bearish as holdings of SPDR Gold Trust, the top gold-backed exchange traded fund, dropped 4.20 tonnes to 782.88 tonnes on Monday – near a five year low. The decline is the biggest outflow since mid-April. Gold – considered a hedge against political uncertainties and riskier assets such as equities – could draw support from the Iraq situation. President Barack Obama considered options for military action to support Iraq’s besieged government, while U.S. and Iranian officials held talks to stabilize the region, which has been roiled by the advance of Sunni rebels toward Baghdad.
