Gold prices turned lower in Asia, extending losses set in the previous session after two day meeting of the Federal Reserve showed policymakers decided to continue to taper asset purchases program to $45 billion on the view that the economy is improving and is in less need of monetary stimulus.
Gold prices remained lower after Federal Reserve opted to go further with cutting its asset purchases program, though prices didn`t plummet as a $10 billion cut to the stimulus program came as little surprise to many.
Spot gold is currently trading at $1,285.80 down 0.61 percent, 7.95 point after opening at $1,291.21 while hitting an intraday high at $1,292.67 and low at $1,284.76. The metal is expected to face support at $1,276.97 and resistance at $1,306.78.
Gold Weighed By US Growth Optimism
Elsewhere on Wednesday, a report released by the Bureau of Economic Analysis showed that U.S. economy barely grew in the first quarter of the year, plagued by severe winter weather that took its toll on business investment, exports and inventories.
U.S. Gross Domestic Product (GDP) came at a mere annual rate of 0.1 percent in the first quarter, down from 2.6 percent in the last quarter of 2013 and far shy of expectations for a 1.2 percent growth rate.
Still, Fed hints suggesting that rough winter weather made the economy look worse than it was tarnished gold`s appeal. The Fed gave a mostly upbeat assessment of the economy`s prospects.
Traders Brace For Solid Nonfarm Report
Gold traders are bracing for a strong April nonfarm payrolls report after strong figure from private payrolls processor (ADP) helped firm ideas of a pickup in hiring and may have boosted some of the estimates for Friday’s report.
Private-sector employers added 220,000 jobs in April, which was up from the revised 209,000 reported for March, slightly above 210,000 estimates. Results added to the view the U.S. economy and the labor sector in particular are rebounding from the winter-plagued start of the year.
Expectations for Friday’s nonfarm report range widely, with expectation of 210,000 new jobs created, and an unemployment rate of 6.6 percent. In March, the U.S. created 192,000 jobs and the unemployment rate was 6.7 percent.
As of 10:08 GMT +3, dollar traded lower at 79.50 after opening at 79.56. The USDIX so far recorded an intraday high at 79.60 and low at 79.49.
Ukraine Crises Fails To Support Safe-Haven Appeal
Gold - often seen as a safe-haven asset at times of uncertainty - failed to find support from escalating tensions in Ukraine, where pro-Moscow separatists seized more government offices. The crisis is taking another hike despite new Western Sanction against Russia.
In latest development, the International Monetary Fund has approved a two-year $17.1 billion loan package to aid Ukraine’s troubled economy. The approval gives the green light for the immediate release of $3.2 billion.
The package will open up loans from other donors totaling around $15 billion.
Physical Demand
China, the world`s leading gold nation which overtook India as the world`s top gold consumer last year, has seen sluggish interest since the end of January. Consumers and importing banks have been buying less since the Chinese New Year break due to a weaker Yuan.
As of 3:02 EST:
- Silver fell 0.75%, 0.14 points to $19.05
- Platinum lost 0.58%, 8.25 points to $1,418.25
- Palladium dropped 0.70%, 5.65 points to $806.65