April 4, 2012 / 4:35 AM / in 7 years

PRECIOUS-Gold extends losses as US stimulus hopes fade

* FOMC minutes dash hopes of further stimulus
    * Spot gold could fall to $1,631/oz - technicals
    * Coming up: U.S. ADP Employment report, March; 1215 GMT

 (Updates prices)	
    By Rujun Shen	
    SINGAPORE, April 4 (Reuters) - Gold struggled to regain lost
ground on Wednesday after tumbling nearly 2 percent in the
previous session, as the minutes of the U.S. Federal Reserve's
last policy meeting showed diminishing appetite for further
monetary stimulus.	
    Expectations of another round of quantitative easing had
boosted gold's appeal as a hedge against inflation and pushed
prices to $1,790.30 in February, the highest level since last
November.	
    Policymakers at the U.S. central bank believed that the
gradually improving economy had lessened the need for more
monetary easing, even though they remained cautious about a
broad pickup in economic activities. 	
    The minutes came just a week after Fed Chairman Ben Bernanke
hinted at the possibility of further stimulus, which drove
stocks and commodities higher and cut the yields in U.S.
Treasuries. 	
    "Everything is linked through the phenomenon of massive cash
supply from central banks," said a Singapore-based trader. "The
minutes seem to support a view that the Fed is not going to pump
more and more cash into the markets."	
    Spot gold edged down 0.1 percent to $1,643.30 an
ounce by 0633 GMT, after posting its biggest one-day decline in
three weeks. Prices dropped below $1,640 on Tuesday.	
    U.S. gold dropped 1.6 percent to $1,645.00, tracking
weaker spot prices.	
    	
    A firmer dollar, which hit a one-week high against a basket
of currencies, also weighed on commodities priced in the
greenback.  	
    "The US economy seems to be somewhat on its own in terms of 
growth 'ramp-up' just as Europe nears recession, while China's
growth remains suspect despite this weekend's stronger PMI
number," said INTL FCStone analyst Ed Meir in a research note.	
    "This means that the dollar will likely push higher from
here, not necessarily a fertile backdrop for either metal (gold
or silver)."    	
    U.S. Treasuries had their largest selloff in three weeks on
Tuesday as the Fed officials disappointed the market that had
expected more bond purchasing and persistently low real interest
rates. 	
    Adding to evidence on improving U.S. economy, new orders for
U.S. factory goods rebounded in February and firms increased
orders for capital goods. 	
    	
    PHYSICAL BUYING	
    The sharp drop in prices attracted some physical buying
interest from bullion dealers in Asia, though Hong Kong and
China are closed for a public holiday, dealers said.	
    "Prices below $1,640 are still attractive to physical
buyers," said a Singapore-based dealer, but added that India's
imports remained depressed as the jewellers' strike drags into
the third week.	
    Platinum group metals held up relatively well during the
sell-off on Tuesday, on strong U.S. auto sales data.
 	
    Spot platinum was little changed at $1,634.74, and
spot palladium traded nearly flat at $648.75.	
    Gold's premium over platinum has narrowed to below $10 from
nearly $45 last week, as platinum outstripped gold on weekly
performance charts.	
    	
     Precious metals prices 0633 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1643.30   -1.53   -0.09      5.08
  Spot Silver        32.38   -0.24   -0.74     16.94
  Spot Platinum    1634.74   -0.11   -0.01     17.35
  Spot Palladium    648.75    0.15   +0.02     -0.57
  COMEX GOLD JUN2  1645.00  -27.00   -1.61      4.99        14773
  COMEX SILVER MAY2  32.41   -0.86   -2.59     16.08         4305
  Euro/Dollar       1.3205
  Dollar/Yen         82.64
  COMEX gold and silver contracts show the most active months
0 : 0
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