Spot gold prices added to earlier losses on Wednesday, falling over 1.5 percent to $1,654.50 per ounce, a four-day low, as investors sold risk assets following a weaker-than-forecast February US durable goods orders reading. Spot gold set its lowest price since March 23 at $1,654.50 an ounce, off the previous close at $1,680.04. US gold futures for April delivery fell $27 an ounce, or 1.6 percent, to $1,657.90.
"Notice how 1700/1690 held sturdy," VTB Capital analyst Andrey Kryuchenkov said. "(This is) not a massive pullback, $1,640 will certainly hold for now, but a tad more is possible." Activity on the wider markets suggested appetite for assets seen as higher risk was muted. European stocks surrendered early gains and safe-haven German bund futures firmed.
Nonetheless, expectations for a continuation of super-loose monetary policy and ongoing official sector buying is supporting the medium-term outlook for gold. Physical gold demand has come under pressure this week from an ongoing strike among jewellers in India, the world's largest bullion consumer, who are protesting against a hike in import duty for bullion.
India's Finance Minister said on Tuesday the country will not cut import duty on gold, which it doubled to 4 percent this month, although it is considering jewellers' demands for the removal of a 0.3 percent excise duty on unbranded jewellery. "The removal of the excise tax may be a step towards meeting some of the grievances listed by Indian jewellers in the wake of the government budget," said HSBC in a note.
Goldman Sachs said in a report on Wednesday that, as gold prices are closely linked to US real interest rates, they may have been suffering from expectations for stronger growth. "The gold market may have been expecting that real rates would soon be rising along with improving economic growth, leading to a sharp decline in net speculative length in gold futures," it said.
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