SINGAPORE (Reuters) - Gold dropped for a third consecutive session on Tuesday to its lowest in almost two weeks, with investors focused on closely watched policy meetings of the U.S. and Japanese central banks.
A rise in global equity markets over the past few days has provided headwinds to the gold market which has gained around 16 percent this year.
Asian stock markets were tentative on Tuesday as they braced for policy announcements, with all eyes on the Bank of Japan’s meeting later in the day after it stunned markets in January by adopting negative rates. [MKTS/GLOB]
Spot gold lost 0.6 percent to 1,227.20 an ounce by 0231 GMT while U.S. gold slid 1.3 percent to $1,228.40 an ounce. Spot gold earlier in the session fell to $1,225.70 an ounce, its lowest since March 2.
“We are waiting for the outcome of the Fed meeting and data coming from the United States is showing that the state of the economy is not bad,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers Ltd.
“I think there are too many long positions in the market. They are taking some profit.”
Most investors expect the Bank of Japan to hold policy steady as Governor Haruhiko Kuroda has said he hopes to spend more time assessing the impact on the economy of the central bank’s negative interest rate policy.
The U.S. Federal Reserve’s two-day policy meeting will start on Tuesday and be watched for clues on the future pace of U.S. rate increases.
Further U.S. rate hikes could lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced. The metal has risen 16 percent this year as expectations for further near-term hikes faded.
The weak move in gold over the last two sessions followed Friday’s brief bounce to a 13-month high after the European Central Bank signaled an end to rate cuts and the euro rose sharply versus the dollar. Gold is highly sensitive to monetary policy and resulting currency moves.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 1.08 percent to 790.14 tonnes on Monday from 798.77 tonnes on Friday. In terms of ounces, holdings fell to 25,403,927 ounces from 25,681,155.
Hedge funds and money managers increased their bullish COMEX gold position to the highest in 13 months in the week to March 8, the eighth increase in the last nine weeks, data showed on Friday.
Reporting by Naveen Thukral; Editing by Michael Perry and Richard Pullin
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