Gold dropped for the fourth time in five days as investors weighed the outlook for U.S. interest rate increases, including comments from Federal Reserve Bank of Chicago President Charles Evans, who said two rises this year are “not at all unreasonable.”
Bullion for immediate delivery fell as much as 0.4 percent to $1,242.85 an ounce and was at $1,243.94 at 9:40 a.m. in Singapore, according to Bloomberg generic pricing. On Tuesday, the metal had jumped as much as 1.3 percent on haven demand after bombings in Brussels that killed at least 31 people.
Gold has rallied 17 percent this year on its increasing appeal as a store of value following financial-market turmoil, the spread of negative interest rates in Japan and Europe, and the Fed’s dovish outlook on further rate increases. On Tuesday, Evans told an event in Chicago that while policy makers’ pause in hikes last week was appropriate after a bumpy start to the year, there may be further rises later in 2016.
“Gold is consolidating this week, with the market having largely priced in the more dovish outlook that we saw from the Fed last week,” said Jordan Eliseo, Sydney-based chief economist at trader Australian Bullion Co. “The market is technically overbought, though it’s looked that way for a couple of weeks.”
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