Gold heads for longest losing run this year before Fed meeting

NEW YORK] Gold fell for a third day to the lowest level in a week before Federal Reserve policy makers gather and as European finance ministers agreed to work with the new Greek prime minister to keep the country in the euro.

Bullion for immediate delivery lost as much as 0.7 per cent to US$1,272.44 an ounce, the lowest price since Jan 19, and traded at US$1,277.71 at 1:44 pm in Singapore, according to Bloomberg generic pricing. The metal rose on Jan 22 to US$1,307.62, the highest level since Aug 15, as the European Central Bank expanded stimulus, and a third day of declines would be the longest losing run since the period to Nov 28.

The Federal Open Market Committee begins a two-day meeting today as policy makers weigh the timing of an interest-rate increase. Finance ministers in Europe began considering how to revive Greece's rescue program and signaled their willingness to do a deal with Alexis Tsipras as long as he drops demands for a debt writedown. Gold has risen 7.7 per cent this year amid speculation the Fed will hold off raising borrowing costs.

The "gold market's focus may shift to the upcoming FOMC meeting," James Steel, an analyst at HSBC Securities (USA) Inc., wrote in a note. "The market's focus has been more so on global monetary policy expectations and less so on Greek developments. In the near term, bullion may continue to consolidate from gains made earlier in the year." Bullion for April delivery lost as much as 0.6 per cent to US$1,273 an ounce on the Comex in New York, the lowest level for the most active contract since Jan 20, before trading at US$1,278.20. Some 45 per cent of 53 economists in a Bloomberg survey said the Fed will raise the benchmark rate in June.

The Netherlands joined Russia and Kazakhstan in adding gold to reserves in December, data from the International Monetary Fund showed. Turkey and Mexico were among nations that reduced holdings, according to the data.

Silver for immediate delivery declined 0.4 per cent to US$17.8514 an ounce. Platinum was little changed at US$1,253.60 an ounce while palladium retreated 0.4 per cent to US$777.20 an ounce.

BLOOMBERG