Gold declined from a three-week high as the Federal Reserve prepared to meet on monetary policy.
The Fed will release a policy statement on Wednesday and data is expected to show the U.S. economy grew at the slowest pace in a year. With recent economic reports coming below forecasts, officials will wait until September to raise interest rates, according to economists surveyed by Bloomberg. Higher borrowing curb gold’s appeal because the metal generally only offers returns through price gains.
“People are keeping a close eye on the FOMC meeting for further guidance on interest rate rises,” Jonathan Butler, a precious metals strategist at Mitsubishi Corp., said by phone from London. “We still expect the Fed to wait until the third quarter, and any delay is a stay of execution for gold.”
Gold for June delivery fell 0.5 percent to $1,207.40 an ounce at 8:06 a.m. on the Comex in New York. Trading volume was 38 percent below the 100-day average for the time of day. On Tuesday, prices touched the highest since April 7.
The metal for immediate delivery lost 0.3 percent to $1,208.38, according to Bloomberg generic pricing.
Fed officials have said their decision to raise rates will be data-dependent. Gross domestic product in the U.S. expanded an annualized 1 percent in the first three months of the year, according to economists surveyed by Bloomberg, down from 2.2 percent in the previous quarter.
Silver for July delivery fell 0.7 percent to $16.63 an ounce in New York. Platinum declined 0.1 percent to $1,157 an ounce, while palladium for June delivery retreated 0.5 percent to $777.45 an ounce.