The price of gold dived near a three-year low Thursday morning after the US Federal Reserve indicated it would slow the pace of bond purchases later this year.
Gold for August delivery, the most actively traded contract, lost $75.70 to $1,298.30 an ounce, levels not seen since September 2010.
Yesterday, gold rebounded from a near four-week low even as investor anxiety persisted over the the outcome of the two-day U.S. Federal Reserve's policy meet. With no major macroeconomic data available today, there were little catalysts to provide fresh direction for gold. Nevertheless, the precious metal found some support with the dollar weakening against a basket of major currencies.
Meanwhile, the U.S. dollar advanced toward a 2-week high versus the euro and sterling, while extending gains versus the yen and the Swiss franc.
In economic news, euro zone business activity logged the smallest downturn since March last year, flash survey data from Markit Economics showed. The composite output index improved to 48.9 in June from 47.7 in May. The reading also exceeded consensus forecast of 48.1. Nonetheless, the sub-50 reading nevertheless rounded off another weak quarter.
Meanwhile, the Swiss National Bank decided to retain the currency ceiling at CHF 1.2 per euro and said it stands ready to enforce the franc cap, if necessary, by buying foreign currency in unlimited quantities. The target range for the three-month Libor was left unchanged at 0.0-0.25 percent. The decision was in line with economists' forecast.
German producer price inflation rose less than expected in May, data from the Federal Statistical Office showed. The producer price index rose 0.2 percent year-on-year in May, faster than a 0.1 percent increase in the previous month. Economists had forecast an increase of 0.3 percent.
Germany's manufacturing activity declined at a faster rate in June, defying economists' expectations that the downturn would ease, latest data showed. The seasonally adjusted purchasing managers' index for the manufacturing sector dropped to a two-month low of 48.7 in June from 49.4 in May, data from a survey by Markit Economics and BME revealed. Economists had forecast the index to rise to 49.9.
Elsewhere, the prices of silver and platinum were trading lower in morning deals.
From the U.S., the Labor Department is scheduled to release its jobless claims report for the week ended June 15th at 8:30 am ET. Economists expect claims to rise to 340,000 from 334,000 in the week ended June 8th.
Later during the session, the National Association of Realtors will release its existing home sales report. Economists expect existing home sales to come in at a seasonally adjusted annual rate of 5 million units for May compared to a 4.97 million-unit rate for April.
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