Gold declined on speculation that a rally to the highest level in more than three months is curbing physical demand in Asia and as the U.S. Federal Reserve indicated that it will press on with cuts to stimulus.
Bullion for immediate delivery fell as much as 0.3 percent to $1,318.68 an ounce and traded at $1,318.94 at 9:19 a.m. in Singapore. Prices are little changed this week after climbing to $1,332.45 on Feb. 18, the highest level since Oct. 31. Gold for April delivery gained 0.2 percent to $1,319.80 on the Comex.
After slumping by the most since 1981 last year, gold rose 9.5 percent in 2014 as signs the U.S. economy wasn’t recovering in line with expectations boosted demand for a haven. At the Fed’s January meeting policy makers signaled they won’t let weaker economic reports interrupt plans to taper, according to minutes this week. Westpac Banking Corp. yesterday reiterated its bearish outlook on bullion as the stimulus is withdrawn.
“A low Chinese onshore premium is indicating a lack of physical buying from Asia at these levels,” Australia & New Zealand Banking Group Ltd. analysts including Victor Thianpiriya wrote in a note today. The premium for gold of 99.99 percent purity for immediate delivery in Shanghai was at $1.596 today compared with $10.1563 on Feb. 19 and a discount yesterday, according to data compiled by Bloomberg.