Gold Drops As Fed Optimistic About US Economy

Gold fell by the most in more than a month after the Federal Reserve upgraded its assessment of the U.S. economy and labor market.

The Federal Open Market Committee described the economic expansion as “solid,” after a meeting in Washington on Wednesday, an improvement over the “moderate” performance it saw in December. It substituted “strong” for “solid” in its evaluation of job gains. Higher rates curb gold’s appeal because the metal typically offers returns when prices rise.

“Positive sounds out of the Fed hurt,” Georgette Boele, an analyst at ABN Amro Bank NV, said by e-mail. “When precious metals get under pressure, it is often not a small move.”

Bullion for April delivery fell 1.2 percent to $1,272 an ounce at 9:11 a.m. on the Comex in New York. It fell as much as 1.8 percent earlier Thursday, the biggest drop since Dec. 22. Futures trading volume was 82 percent higher than the average for the past 100 days for this time of day, according to data compiled by Bloomberg.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza