Gold Prices Decline to Lowest Level 12 Weeks

Gold futures contract fell to its lowest in 12 weeks since the Federal Reserve (the Fed) give the sign would not provide additional monetary stimulus. The Fed's statement gave a positive sentiment to the U.S. dollar and gold dropped as an alternative investment.

Gold futures contract for June delivery fell 3.5 percent to 1614.10 dollars per troy ounce (equivalent to 31.1 grams) on Wednesday (04/04/2012) at 1:35 PM at the Comex in New York. Price was the biggest drop since February 29, 2012. This yellow metal had touched the price of 1613 U.S. dollars. "The market has decided that the statement (the Fed) today may be the" final nail in the coffin "for additional stimulus from the Fed," said Frank Lesh, trader at FuturePath Trading, in Chicago.

The U.S. central bank will not provide additional monetary stimulus unless the U.S. economic expansion is disrupted or prices rose at a slower rate of 2 per cent target. The statement released on Tuesday (03/04/2012) local time, referring to a meeting on 13 March.

As a result, the U.S. dollar rose to its highest level for a week against six major currencies. On the other hand, the euro weakened Spain's debt.

"Gold is reacting to the strengthening U.S. dollar," added Frank. For information only, on February 29, 2011, gold prices had dropped as much as 100 dollars after the U.S. central bank Governor Ben S. Bernanke did not provide a signal that the central bank will take a new step towards monetary stimulus.