Gold fell the most in three weeks on signs that investors are balking at the metal even after a recent rally.
Hedge funds cut their net-long position to the
lowest since December 2013 and are holding the most short wagers since
records begin in 2006, U.S. government data show. Global assets in
exchange-traded products backed by gold dropped 56.6 metric tons in
March, the most in 15 months. Prices rallied in the previous two weeks
on speculation that U.S. interest rates would rise at a slower pace than
expected.
Even after Federal Reserve policy makers cut their
outlook for where borrowing costs will be by year-end, investors are
betting that officials will still lift benchmark rates from near zero
fast enough to prevent inflation from surging as the economy rebounds.
Gold has historically been used as a hedge against higher consumer
prices.
Gold futures for June delivery dropped 1.3 percent
to settle at $1,185.30 an ounce at 1:40 p.m. on the Comex in New York,
the biggest drop since March 6.
A core measure of consumer prices, which excludes
food and fuel, rose 1.4 percent in February from a year earlier,
Commerce Department figures showed Monday.
Source: Bloomberg
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