Gold holds slump after Fed minutes point to possible June hike

[SINGAPORE] Gold traded near a three-week low on concern that the Federal Reserve may raise interest rates as soon as June after the possibility was flagged in the minutes from policy makers' meeting last month.

Bullion for immediate delivery was little changed at US$1,260.18 an ounce at 8:58 am in Singapore, according to Bloomberg generic pricing. After the minutes were released on Wednesday, it sank as much as 1.9 per cent to US$1,255.23, the lowest price since April 28.

Gold is retreating from a 15-month high as investors try to gauge the likelihood of higher US borrowing costs, which tend to hurt bullion demand while boosting the US dollar.

The April minutes indicated most policy makers said a hike would be appropriate in June should the US economy continue to improve. Odds for a rise next month have surged to 32 per cent, from 4 per cent on Monday, according to Fed funds futures compiled by Bloomberg.

BLOOMBERG