Gold price falls out bed
Gold on Thursday plunged more than $30 an ounce on the back of profit-taking triggered by yesterday's interest rates announcement by the US Federal Reserve.
In heavy trade of more than 22m ounces by lunchtime in New York, gold for delivery in April – the most active futures contract – fell over $35 an ounce or 2.8% from Wednesday's close hitting a low of $1,251.84 an ounce – the lowest in two weeks and the worst trading day in more than a year.
The metal is still trading up nearly $70 or almost 5.5% in 2015, but is down sharply from an intra-day high of $1,307 hit last week.
Gold's gains this year have been ascribed to safe haven buying amid currency turmoil, a slowing global economy, the continuing fallout of the collapse in oil prices and a crisis in the Eurozone.
But with the first hike in more than six year likely at the Fed's June meeting raising the opportunity costs of holding gold because the metal provides no yield, gold traders refocused their attention on fundamental factors.
Higher rates also boost the value of the dollar – already trading at multi-year highs – which usually move in the opposite direction of the gold price.
On Thursday, the greenback came close to fresh 12-year highs against the currencies of major US trading partners. The dollar index has strengthened by 17.6% over the last year.
US economic growth numbers due out on Friday could provide further direction for the gold price, but as the Fed also noted in its statement, the international environment remains uncertain.
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