Gold Flip-Flops as Rosier China Leaves Investors Guessing on Fed

  • Best-performing metal in first quarter sees halt to inflow
  • Traders seek clues on rates from Fed policy meeting this week

The first quarter’s best-performing metal has run out of juice.

Gold’s barely changed this month, flipping between gains and losses, after surging 16 percent in the quarter, the biggest such advance in three decades.

That’s down to signs of improvement in China’s economy and as investors wait for signals from the U.S. on the outlook for interest rates. Cash flowing into exchange-traded funds back by the metal has hit the buffers after pouring in at the fastest pace in seven years in the first three months.

“During the first quarter, people were worried about a global recession, but now the economic news is better, so gold hasn’t followed through with further gains,” Thorsten Proettel, a commodity analyst at Landesbank Baden-Wuerttemberg, said by phone. “ETF flows have all but come to a halt and upward drivers are lacking.”

Bullion for immediate delivery rose 0.3 percent to $1,242.30 an ounce by 2:45 p.m. in New York, according to Bloomberg generic pricing. It earlier fell as much as 0.5 percent. Gold futures for June delivery advanced 0.3 percent to settle at $1,243.40, after losing as much as 0.6 percent.

Rate Outlook

Investors are seeking clues on future rates as higher borrowing costs curb the appeal of owning non-yielding assets like gold. Traders see no chance the Fed will raise rates when a two-day meeting ends Wednesday and only 20 percent odds of a move in June. Half the analysts surveyed by Bloomberg expect the Bank of Japan to boost stimulus April 28.

“Gold has been range-bound awaiting more clarity from central banks,” Madhavi Mehta, an analyst at Mumbai-based Kotak Commodity Services Ltd., said by e-mail.

China, vying with India as the biggest gold consumer, raised imports from Hong Kong in March as a price rally stalled and local investment demand showed signs of recovery.

In ETFs and other metals:

  • Holdings in exchange-traded funds backed by gold fell 3.1 metric tons to 1,753.7 tons on Monday, data compiled by Bloomberg show.
  • Silver for immediate delivery rose 0.5 percent to $17.0896 an ounce after entering a bull market last week.
  • Platinum and palladium fell.
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