Precious-Gold resumed its drop on Monday after recording its biggest weekly decline since November last week as the Fed hinted to a possible rise in interest rates early next year.
Fed officials said they predict a hike in borrowing cost to at least 1 percent at the end of 2015, higher than previously expected. Fed Chairman Janet Yellen said interest rates may rise in six months after the end of the bond purchases withdrawal.
The Fed opted to slash bond purchases for a third straight month by $10 billion to $55 billion, showing seriousness that stimulus will be cut “in further measured steps at future meetings.”
The Fed’s hint to the possibility of ending the bond-buying programme this fall damped demand on the shiny metal as an inflation hedge, while the earlier than expected rise in interest rates dented the metal’s allure as a store of value.
The yellow metal lost 3.48 percent the previous week, to resume its fall from six-month high, as investors’ attention shifted from Ukraine’s turmoil to the U.S. monetary decision.
Meanwhile, the yellow metal is trading around $1325.08 an ounce after hitting a high of $1334.48 and a low of $1322.11.
On the other hand, the Fed statement gave a boost to the dollar, pushing it near three-week high.
The U.S. dollar gained more than 1 percent last week against a basket of major currencies, where it is currently hovering around 80.30 after opening at 80.24, according to the dollar index.
Crude oil for May’s delivery was little changed trading near the session’s opening at $99.47 a barrel.
On the physical side, demand from the world’s biggest bullion buyer China has waned amid the recent depreciation in the yuan and signs of slowdown in economic growth.
A report released today showed that China’s flash PMI manufacturing dipped to an eight-month low of 48.1 in March from 48.5 the previous month, coming below analysts’ forecast of 48.7.