Forexpros –
Forexpros – Gold futures traded sharply lower Wednesday, falling to the lowest level since mid-January, as the Federal Reserve’s upbeat economic assessment decreased safe haven buying in the precious metal and fuelled the risk on trade.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,636.45 a troy ounce during U.S. afternoon trade, plunging 3.42%.
Gold futures were likely to find support at USD1,625.85 a troy ounce, the low from January 13 and resistance at USD1,706.15, the previous day’s high.
Gold traders have turned bearish due to the Fed’s upbeat domestic economic assessment on Tuesday. Ben Bernanke, the Fed Chief stated, he saw clear signs of an improving economy and expected the unemployment rate to keep falling. The Fed added that strains in the global financial markets have eased.
Gold prices lost nearly 5% on February 29, when Fed Chairman Ben Bernanke failed to mention another round of easing in a statement in his testimony to the U.S. Congress.
However, policymakers reiterated their intention to keep the benchmark interest rate unchanged at a record low through late 2014 and made no changes to its Operation Twist program to replace shorter-term Treasuries in its balance sheet with longer-term debt.
Investors are now looking to the Fed’s policy meetings in April and June for decisions about any new directions for policy.
At both meetings, Bernanke will hold a news conference and officials will make public updated economic and interest rate projections.
The upbeat Fed assessment boosted the dollar, which traded at a one-month high against the euro and an 11-month top against the yen.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.41% to trade at 80.98, the highest since January 18.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal’s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Elsewhere on the Comex, silver for May delivery plunged 5.12% to trade at USD31.86 a troy ounce, while copper for May delivery tumbled 1.63% to trade at USD3.84 a pound.
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