Gold price falls amid uncertainty over Fed rate hike
New York (Apr 30) Gold prices dropped in early trading on Thursday, extending losses from the previous session after the Federal Reserve kept interest rates on hold, but offered little hints on the timing of its first rate hike in nearly a decade.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery hit an intraday low of $1,200.60 a troy ounce, before trading at $1,202.70 during European morning hours, down $7.30, or 0.6%.
On Wednesday, gold shed $3.90, or 0.32%, to close at $1,210.00. Prices hit a three-week peak of $1,214.60 on Tuesday.
Futures were likely to find support at $1,177.60, the low from April 27, and resistance at $1,214.60, the high from April 28.
Also on the Comex, silver futures for July delivery dropped 18.9 cents, or 1.13%, to trade at $16.51 a troy ounce. A day earlier, silver rose to $16.72, a level not seen since April 8, before ending at $16.70, up 7.2 cents, or 0.43%.
In its monthly policy statement on Wednesday, the Fed said it will take into account labor market conditions, inflationary pressures and expectations of international financial developments when it decides on the timing of a rate increase.
The central bank removed all calendar references on a potential window for raising rates from its statement, adding to uncertainty over the timing of a Fed rate hike.
The statement came after data on Wednesday showed that the U.S. economy grew just 0.2% in the three months to March, slowing sharply from 2.2% in the final quarter of 2014. It was the slowest rate of growth in a year.
Investors were looking ahead to weekly data on initial jobless claims later Thursday for further indications on the strength of the economy.
A recent run of disappointing U.S. economic data dampened optimism over the recovery, fuelling speculation the Fed could delay hiking interest rates until late 2015, instead of tightening midyear.
The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was steady at 95.34 early on Thursday, after hitting a low of 94.75 on Wednesday, the weakest level since February 26.
Elsewhere in metals trading, copper for July delivery inched down 0.4 cents, or 0.13%, to trade at $2.795 a pound, turning lower after touching a session high of $2.805, the strongest level since April 20.
Copper remained supported amid speculation policymakers in China will have to introduce further stimulus measures to jumpstart the economy amid lackluster growth.
The Asian nation is the world's largest copper consumer, accounting for almost 40% of world consumption.