Gold price slides, safe-haven bids retreat as dollar climbs

Singapore (Apr 14)  Gold dropped 1% on Thursday, extending losses into a third session as the US dollar strengthened and Asian stocks gained on hopes that global central banks would ease monetary policies to support softening economies.

Asian shares rose to their highest levels in more than four months and regional currencies weakened against the greenback after Singapore's central bank surprised markets by setting the rate of appreciation of the Singapore dollar policy band at zero percent.

Spot gold dropped as low as $1 228.70 an ounce, before paring losses to trade down 0.8% at $1 232.50 by 08:33. US gold futures slid as much as 1.4%.

Silver futures tumbled nearly 2% snapping a five-day winning streak, while platinum and palladium fell 1%.

"Gold is weakening on a recovery in investor risk appetite. The sharp (equities) rally and the levelling off of gold-ETF demand recently argue for some period of price consolidation," HSBC analyst James Steel said.

"It is possible this consolidation turns into liquidation, but we think any continued sell-off, though likely, should be modest."

Bullion-backed exchange-traded funds have seen outflows in recent days following sharp inflows earlier in the year.

Assets of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 5.05 tonnes to 810.09 tonnes on Wednesday, its lowest in a month.

Traders said charts looked weak for gold, with sharp selling seen as prices fell through 50-day moving average near $1 230.

Uncertainty over US monetary policy also weighed.

Gold has rallied 16% this year on waning expectations of aggressive US interest rate hikes. But Richmond Fed President Jeffrey Lacker, San Francisco Fed President John Williams and Philadelphia Fed President Patrick Harker all suggested this week that several hikes were possible this year, cutting into gold's recent gains.

In an interview published on Wednesday, Fed chair Janet Yellen said she still favours a cautious approach to monetary policy because the US central bank must try to avoid making "big mistakes."

Data overnight showed US retail sales fell in March as households cut back on purchases of automobiles and other items, further evidence that economic growth stumbled in the first quarter and reinforcing Fed caution on rate hikes.

Source: Fin24