The price of gold increases, moving away from a minimum of three and a half months, but is preparing to complete may the strongest drop since November due to the strengthening of the us dollar on expectations of a rapid recovery rates of the U.S. Federal reserve.
The influx of investment in gold has slowed down due to prospects of an early increase in U.S. interest rates, while the lack of physical demand led to some weakening of prices in recent years, said Mitsubishi Corp analyst Jonathan Butler.
US data on Friday showed that hedge funds and money managers reduced their bullish bets on U.S. gold futures market and options to the lowest in almost two months.
Gold, which rose in price by 16 percent in the first quarter, is under pressure since the release of the minutes of April’s fed meeting, warmed up expectations of imminent rate increase the United States. Subsequent reviews of key Central Bank officials, including fed chief, Janet Yellen, gave reason to assume that the increase will happen in June or July.
The dollar on Tuesday fluctuates near two-month high against a basket of currencies.
Consumer spending in the U.S. rose sharply in April, recording the fastest rate in nearly seven years, pointing to continued economic improvement after a sluggish start this year. This was reported in the Ministry of Commerce. According to the data in April the volume of personal spending rose 1.0%, following zero change in March (revised from +0.1%). It was the strongest growth since August 2009. Economists had forecast that personal spending will rise by 0.7%.
In addition, the indicator of consumer confidence from the Conference Board declined markedly in may, reaching the level of 92.6 (1985 = 100) compared to 94.7 in April. Analysts index rises to 96.0 from. The current conditions index fell to 112,9 with of 117.1, and the expectations index fell to 79.0 from 79.7.
“Short-term downside risks primarily related to the further strengthening of the U.S. dollar and further sentiment of futures market”, the review says Julius Baer.
The cost of the June gold futures on the COMEX rose to $1215,1 per ounce.