Gold pared the biggest advance in almost two weeks as global equities surged after Federal Reserve Chair Janet Yellen reasserted the central bank’s gradual approach to raising U.S. interest rates.
Bullion for immediate delivery fell 0.4 percent to $1,236.85 an ounce by 10:50 a.m. in Singapore, according to Bloomberg generic pricing. The metal ended 1.7 percent higher on Tuesday after Yellen’s remarks, the most since March 16. A gauge of the U.S. currency was little changed after dropping 0.8 percent a day earlier.
Gold is this year’s best performing commodity on speculation that the Fed may refrain from further tightening to protect the recovery in the world’s largest economy. In comments at the Economic Club of New York, Yellen indicated deteriorating world growth warranted a slow approach. Bullion is 17 percent higher this quarter as investor holdings in exchange-traded products have expanded by 300 metric tons.
While “gold bugs might like to stay bullish, they are not foolish and would like to take profit from the recent rally,” Mark To, head of research at Wing Fung Financial Group, a trader and refiner in Hong Kong, said by e-mail. In the second quarter, the metal may rise to as much as $1,400 as it’s now clear the Fed will proceed cautiously, he said.
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- In China, bullion of 99.99 percent purity jumped as much as 1.7 percent to 259.32 yuan a gram ($1,243.37 an ounce) on the Shanghai Gold Exchange and was at 258.55 yuan.
- Asian stocks tracked a surge in the U.S., with the MSCI Asia Pacific index rising 1 percent on Wednesday. While lower rates are a boon for gold, the rally in global equities may erode demand for the metal as a store of value.
- Other precious metals declined on global markets. Spot silver retreated 0.4 percent to $15.3027 an ounce, platinum fell 0.7 percent to $962.95 an ounce and palladium lost 0.4 percent to $575.10 an ounce.
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