Gold falls to four-month low

Gold falls to four-month low - 18th March 2015

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GOLD has fallen to a four-month low in volatile dealings, on investor jitters ahead of a Federal Reserve policy meeting that may offer further clues to support expectations of a mid-2015 rise in US interest rates.

SPOT gold fell as low as $US1,142.86 an ounce in earlier trade, its lowest since November 7, and was down 0.6 per cent at $US1,147.06 by 2.34 pm EDT (1834 GMT, 0534 Wednesday AEDT).

US gold futures for April delivery settled down $US5 at $US1,148.20 an ounce.

Spot platinum tumbled to a near six-year low at $US1,084.50 per ounce as weaker gold prices and improving supply took a toll on prices. Prices recovered and were down 1.2 per cent at $US1,091.74 an ounce, while its discount to gold expanded to around $US55 an ounce, the widest since March 2013.

Fed policymakers started their two-day meeting on Tuesday, and many analysts expect them to remove a "patient" reference to rate rises from their policy statement. That would put them a step closer to their first rise since 2006.

"We do expect gold to fall further if the Fed removes the word 'patient' from their statement, and the trading action could be very volatile for investors," online broker AvaTrade chief market analyst Naeem Aslam said.

"The low for gold could be (around) $US1,058." Higher interest rates could dent demand for assets such as bullion that do not pay any interest.

"Evidently, traders are unnerved about the prospect of an earlier rate hike from the Federal Reserve and its impact on the dollar," said Fawad Razaqzada, technical analyst for in London.
Razaqzada said that if the Fed drops the closely watched "patient" from its statement on Wednesday, this could buoy the US dollar and pressure assets priced in the greenback such as gold and silver.

"I still expect some negative reaction but maybe we are 90 per cent there for that one and the attention will start to move on how fast rates will be increased," Macquarie analyst Matthew Turner said.

Investor sentiment towards gold continued to be bearish. ETF Securities, an operator of gold-backed exchange-traded products, said its long gold funds saw the largest weekly outflows since inception last week.

Danny Laidler, the head of the firm's Australia and New Zealand operations, said more than $US376 million in funds exited last week.

Silver was down 0.6 per cent at $US15.52 an ounce, while palladium fell 2.2 per cent to $US760.50 an ounce.