Gold continues slide on strong U.S. economic data

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Gold continues slide on strong U.S. economic data

Gold extended a decline from its highest level in more than six months as U.S. economic data beat estimates, backing the case for reduced stimulus before the Federal Reserve begins a two-day meeting.

Bullion for immediate delivery fell as much as 0.7 percent to $1,357.13 an ounce and traded at $1,360.62 by 3:33 p.m. in Singapore. Prices climbed to $1,392.22 Monday, the highest since Sept. 9, before closing 1.2 percent lower. The 14-day relative strength index rose to 72.9 on March 14, signaling to some analysts that prices may drop.

Gold advanced 13 percent this year as turmoil in Ukraine and slowing growth in China increased demand for a store of value. Prices rebounded from their biggest annual slump since 1981, even as the U.S. central bank started to scale back asset purchases. Data yesterday showed U.S. industrial output rose in February by the most in six months.

“The attention has now been brought back to the U.S., with investors focused on what the data is showing and what the Fed is going to do,” said Lv Jie, a Hangzhou-based analyst at Cinda Futures, a unit of one of four funds in China created to buy bad debt from banks. “There’s a sense that things could have been a lot worse in Crimea but that hasn’t happened, so gold lost some of that safe haven support.”

The Fed, which cut monthly bond buying by $10 billion at it prior two meetings, will trim purchases by another $10 billion to $55 billion, and continue reductions at that pace at every meeting before announcing an end to the program at its Oct. 28-29 gathering, according to a survey.

Assets in the SPDR Gold Trust, the biggest bullion-backed exchange-traded product, fell 0.5 percent from the highest level this year to 812.78 metric tons Monday.

Bullion for April delivery sank 0.9 percent to $1,361.10 an ounce on the Comex in New York. Futures slid 0.4 percent yesterday, reversing an advance to a six-month high of $1,392.60.

Bloomberg


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