Gold prices declined after the Federal Reserve boosted its assessment of the U.S. economy and labor market, cutting demand for haven assets.
“Economic activity has been expanding at a solid pace,” Fed policy makers said, while repeating a pledge to be “patient’ on raising interest rates. The comments were made in a statement Wednesday after concluding a two-day meeting.
Spot gold jumped 9.1 percent this year through Jan. 27 as signs of flagging economies in Europe and Asia revived investor demand for a store of value. The metal also rose amid speculation that weaker foreign expansion would prompt the U.S. central bank to wait longer before increasing borrowing costs.
Today’s statement shows ‘‘the Fed is not as concerned with Europe, because Europe has to operate on its own, so the primary concern is with the U.S.,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview.
Gold for immediate delivery fell 0.8 percent to $1,281.67 an ounce at 2:21 p.m. in New York. Prices tumbled 29 percent in the previous two years after some investors lost faith in the metal amid an improving American economy.
A collapse in oil prices has boosted the appeal of gold amid the threat of economy-damaging deflation. Prices are heading for a second straight monthly gain. Hedge funds and other speculators in futures and options are the most bullish on gold in two years, U.S. government data show.
The Fed acknowledged global risks, saying that it will take into account readings on “international developments” as it decides how long to keep rates low.
“The Fed is taking more of a cautious tale because they don’t want to spook the recovery, and I think gold prices should eventually get a boost from that,” Streible said.