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Gold drops 1.5 percent in New York




  • Gold fell 1.5 percent on Wednesday, its biggest one-day drop in 1-1/2 months, hit by signs that the US Federal Reserve is inching closer to ending its monetary stimulus program and by Cyprus’s plan to sell its gold reserves to raise cash. Panic selling sent gold down to near $1,550 an ounce earlier in the session after European Commission documents showed Cyprus plans to sell 400 million euros worth of gold reserves to finance part of its bailout. 

    Gold was also under pressure after minutes from the US Federal Reserve policy meeting in March suggested it was on course to end its extraordinary bond buying stimulus by year-end. “The loose monetary policy around the world is clearly favouring more on equity investments instead of gold,” said Michael Cuggino, portfolio manager of the $15 billion Permanent Portfolio Funds. 

    Spot gold was down 1.6 percent at $1,559.80 an ounce by 3:29 pm (1929 GMT), its biggest one-day decline since February 20. US Comex gold futures for June delivery settled down $27.90 an ounce at $1,558.80 an ounce. Trading volume was about 20 percent below its 30-day average, preliminary Reuters data showed. Among other precious metals, silver dropped 1 percent to $27.65 an ounce, after it rallied 2.5 percent on Tuesday for its biggest one-day rise since mid-February. Palladium was down 0.8 percent at $718, sharply off an earlier three-month low, and platinum dropped 1.4 percent to $1,525.74 an ounce. 

    Copyright Reuters, 2013

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