Gold futures fell the most in three weeks on speculation that the Federal Reserve will further curb monetary stimulus as the U.S. economy recovers, crimping demand for the metal as an alternative investment.
Policy makers trimmed bond purchases for the fourth consecutive meeting last week. “Sufficient underlying strength” made the reductions “appropriate,” Fed Chair Janet Yellen said today at a hearing of the congressional Joint Economic Committee. Bullion slumped 28 percent last year on concern the central bank would slow the pace of bond buying.
“The message today the gold traders heard was that tapering will continue,” Bill O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview. “The Ukraine crisis provided some support, but the overall sentiment remains subdued.”