Prices of gold futures moved further away from a 16-month high in trading in Europe on Wednesdaywhen the US dollar formed following two members of the Federal Reserve of the United States spoke to increases in interest rates this year.
Gold for June delivery on the Comex fell to an intraday low of $1,280.50 a troy ounce before trimming losses to $1,282.85, down $8.95, or 0.69%.
Spot gold was little changed at $1,285.19 an ounce, after dropping 0.4 percent in the previous session.
Gold surged to $ 1,306.00 earlier in the week, a level unseen since January 2015, as one US dollar weaker overall increased the appeal of the precious metal.
The greenback rallied against a basket of six other major currencies on Wednesday, rising to a maximum of 93.23, after hitting a low of 91.89 at one point on Tuesday, its lowest level since January 2015. The last time stood at 93.11, up 0.1% for the day.
Greenback gains occurred subsequent to Atlanta Fed President Dennis Lockhart said the US we could see two interest rates further rises this year, while San Francisco Fed President John Williams said they would support a rate hike in June, as long as he sees continued progress in the economy, inflation and employment.
Gold is sensitive to finger movement in interest rates in the US, as an increase would raise the opportunity cost of holding assets such as bullion non-performance.
Investors are looked forward to enter the US data later in the day to assess whether the world’s largest economy is strong enough to withstand further rate hikes this year.
The recent spike in prices has led investors to invest in gold funds.
The assets of SPDR Gold Trust, top gold-backed exchange-traded funds, rose to its highest level since December 2013 on Monday.
Amid a weakening global trend and profit-booking by speculators, Gold for delivery in far-month August was trading lower by Rs 136, or 0.45 per cent, to Rs 30,318 per 10 gram at the Multi Commodity Exchange.
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