Gold edged lower on Wednesday, extending a nearly 2 percent tumble 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 has 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 $1,642.60 an ounce by 0344 GMT (11.44 p.m. EDT), after posting its biggest one-day decline in three weeks. Prices dropped below $1,640 on Tuesday.
Rujun Shen-Reuters-April 4, 2012