March 19 (Bloomberg) -- Gold fell to a one-week low in New York on speculation the U.S. Federal Reserve will continue cutting stimulus as the economy strengthens, curbing demand for the precious metal as a haven.
The Fed will press on with cuts to its bond buying program and switch to qualitative guidance on interest rates, according to a Bloomberg survey before the central bank releases a statement today. U.S. data released this week showed industrial output rose in February by the most in six months and housing starts were little changed after declining less than previously estimated a month earlier.
Gold advanced 12 percent this year as signs of slowing global growth and the crisis in Ukraine increased demand for a haven. Prices reached a six-month high of $1,392.60 an ounce on March 17. While Russian President Vladimir Putin said his country isn’t seeking to split Ukraine further, the U.S. and Europe pledged more sanctions for his drive to annex Crimea.
“Macro data coming out of the U.S. seems to have strengthened a touch over the last few days,” Edward Meir, an analyst at INTL FCStone Inc. in New York, said in a report written yesterday. “Investors will be preoccupied with the Fed’s policy statement.”
Gold for April delivery slipped 0.9 percent to $1,346.10 by 7:35 a.m. on the Comex in New York. It reached $1,345.40, the lowest since March 11, and a third straight drop would be the longest run of losses since January. Futures volume was 46 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Bullion for immediate delivery declined 0.7 percent to $1,345.85 in London.
The Fed, which cut monthly bond buying by $10 billion at the prior two meetings, will trim purchases by another $10 billion to $55 billion, and continue on that pace at every meeting before announcing an end to the program at its Oct. 28-29 gathering, according to the March 14-17 survey.
Crimea voted on March 16 to join Russia, which should sign a treaty accepting the peninsula’s accession, according to an order signed by Putin and published on a government website. The U.S. and European Union imposed asset freezes and travel bans on members of Putin’s inner circle and Crimean leaders. Western leaders vowed more sanctions if the situation escalates.
“Sanctions by the U.S. and European Union were seen as minimal but as long as the situation in Ukraine remains unresolved, this should keep prices supported,” said Mark To, head of research at Wing Fung Financial Group, a Hong Kong-based trader and refiner.
Silver for May delivery fell 0.4 percent to $20.785 an ounce in New York. Platinum for April delivery lost 0.2 percent to $1,459.50 an ounce. Palladium for June delivery added 0.3 percent to $773.80 an ounce. It reached a one-year high of $788.45 on March 14. Russia is the biggest palladium producer.
The union leading a strike that began Jan. 23 at the world’s largest platinum mines in South Africa said yesterday it won’t back down on demands that pay for some workers be doubled as members marched on Anglo American Platinum Ltd.’s Johannesburg offices. The country is the largest producer of platinum and second-biggest for palladium.