By Barbara Kollmeyer and Carla Mozee, MarketWatch
MADRID (MarketWatch) — Gold prices fell on Wednesday after Goldman Sachs cut its forecast for this year, and the minutes of the Federal Reserve’s last policy meeting showed sharp divisions among officials bank about how long it should keep buying bonds.
Prices stepped back from their strongest level since the start of the month, with gold for June delivery GCM3 -0.62% down $10.60, or 0.7%, to $1,575.70 an ounce.
The precious metal rose Tuesday to settle up $14.20, or 0.9%, at $1,586.70 an ounce on the Comex division of the New York Mercantile Exchange. It was the highest close since April 1, as a weaker dollar and losses in four of the previous five sessions helped lure in bargain hunters.
In a note to investors, Goldman Sachs said it now expects an average price for gold in 2013 of $1,545, down from a prior forecast of $1,610. In 2014, Goldman’s analysts expect prices to fall to $1,350, down from a prior view of $1,590. It was the second cut for their gold forecast in less than two months.
“With our economists expecting few ramifications from Cyprus and that the recent U.S. slowdown will not derail the faster recovery they forecast in 2H13, we believe a sharp rebound in gold prices is unlikely,” they added.
Deutsche Bank on Tuesday cut its outlook on gold prices for this year and next, citing growing headwinds from a strengthening dollar, improving U.S. growth and an increasing appetite for equities over commodities.
Also weighing on gold, minutes of the Fed’s meeting of March 20 showed at least one member wanted to slow the stimulus program of asset buys worth $85 billion a month immediately. A few more favored slowing at mid-year, while others were veering towards later in the year and stopping by year end. Those minutes were released several hours early due to the fact some copies had mistakenly been sent out.
Gold benefits from easy money policies, such as those of the Fed and the Bank of Japan, which is embarked on a massive easing program, as investors seek a hedge against inflation. Any signs that program will slow put a dent in the precious metal.
Federal Reserve Chairman Ben Bernanke hasn’t indicated he’s ready to slow down bond purchases, particularly after the dismal March U.S. jobs report showing the weaker-than-expected creation of 88,000 new jobs.
In other moves Wednesday, silver for May delivery SIK3 -0.43% fell 11 cents, or 0.4%, to $27.77 an ounce. Prices on Tuesday settled at their highest level since April 1.
May copper HGK3 -0.48% lost 2 cent, or 0.5%, to $3.43 a pound.
July platinum futures PLN3 -1.05% fell $15.70, or 1%, to $1,537.40 an ounce, while palladium for June delivery PAM3 -2.39% lost $15.30, or 2.1%, to trade at $717.50 an ounce.
Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @MWBarbaraKollmeyer.
Carla Mozee is a reporter for MarketWatch, based in Los Angeles. Follow her on Twitter @MWMozee.
