Gold futures fell the most since November after Cyprus said it plans to sell the metal to raise money, while minutes from a Federal Reserve meeting spurred speculation that stimulus will be curbed.
Cypriot authorities have committed to sell “the excess amount of gold” owned by the state, yielding an estimated 400 million euros ($522 million), according to a draft of a European Commission report obtained by Bloomberg News. Several members of the Federal Open Market Committee said the U.S. central bank should begin tapering its bond-buying program, minutes from a March meeting showed today. The Standard & Poor’s 500 Index of equities advanced to its highest ever.
“Cyprus selling gold was a big blow,” Tom Power, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “Prices were already under pressure because of the Fed’s comments and the stock market rally.”
Gold futures for June delivery fell 1.8% to $1,558.10 an ounce at 1:35 p.m. on the Comex in New York, heading for the biggest loss since Nov. 2.
Goldman Sachs Group Inc. cut its three-month price target to $1,530 from $1,615 and lowered its 12-month forecast to $1,390 from $1,550, and said the turn in the price cycle is accelerating as the U.S. economy strengthens.
“The end of quantitative easing is destructive for gold as it’s taking inflation off the table,” Sterling Smith, a Chicago-based commodity futures specialist at Citigroup Global Markets Inc., said in a telephone interview. “The sentiment is very bearish.”
The Fed is buying $85 billion of debt a month and has said further improvement in the U.S. labor market is needed for the central bank to consider reducing its record monetary easing.
Through yesterday, prices were down 5.3% this year after 12 straight annual gains. Holdings in the SPDR Gold Trust, the biggest bullion-backed exchange-traded product, fell to 1,200.4 metric tons yesterday, the least since June 2011, data on its website show.
Silver futures for May delivery fell 1.1% to $27.585 an ounce in New York, after jumping 2.7% yesterday, the most since Jan. 30.
On the New York Mercantile Exchange, palladium futures for June delivery tumbled 1.8 percent to $719.85 an ounce, after reaching $704, the lowest since Jan. 15.