Dutch Finance Minister Jeroen Dijsselbloem outlined goals of the banking union project, instilling a measure of confidence that was one factor to draw down demand for the precious metal as a haven asset.
The finance minister said bank resolution, national deposit guarantees for common standards and a resolution plan for European banks are among the new rules that will be proffered next month.
"Any indication that Europe is working towards a resolution is bad for gold," senior market strategist Adam Klopfenstein with Archer Financial Services Inc. in Chicago told the news source on Tuesday. "Money is flowing into riskier assets like equities."
At 11:22 a.m. on Tuesday, gold futures dropped 1.64 percent, a $24.10 loss to $1,445.36 per troy ounce.
In April, gold futures lost roughly 7.7 percent of their value, during which the precious metal endured its sharpest losses during a 48-hour period in more than three decades.
Questions have arisen about how strong the yellowish metal is for the purpose of asset storage.
Hedge-fund manager John Paulson lost 27 percent of his gold fund last month, a knowledgeable source told the news outlet under the condition of anonymity. The billionaire is renowned as an active consumer of the yellowish metal.
The past two weeks saw gold futures surge nearly 5 percent as a result of increased demand for coins and jewelry consisting of the yellowish metal.
"Retail consumers are very price-sensitive, so you don't expect physical buying to go on and on, especially since we've come up more than $100 from the low," analyst Feng Liang with GF Futures Co. in Guangzhou told the news source on Tuesday. "Those who missed the first opportunity are probably hoping for another round of declines."
Imports of the precious metal are forecast to drop in India, the globe's largest consumer, according to Bloomberg.
Reuters reports Britain and Japan were factoring the commentary of President Mario Draghi with the European Central Bank, who said the financial institution he leads is set to act as a strategy of aiding development and growth in the region.
Gold to benefit?
Policy makers with the Reserve Bank of Australia slashed interest rates to 2.75 percent, which represents a new low. Officials said they are prepared to continue with efforts to spur the economy of the South Pacific nation.
The precious metal typically is spurred higher by reductions to interest rates because investors are influenced to direct their money toward assets that do not bear interest, like gold.
"As long as we continue to see stock markets making new highs investors are not in need for alternatives," senior manager Ole Hansen with Saxo bank told Reuters on Tuesday. "A break through $1,440 could set some alarms off and trigger a deeper correction towards the $1,400 area."
Outlook dims for yellowish metal
MarketWatch reports the offing for gold is not too bright as well.
"There's a lot of betting against gold going on," chief economist Ben Traynor with BullionVault told the news source, also noting concerns among investors growing as exchange trade funds lose the precious metal. "Professional money managers have built up a sizeable short position."
But one analyst said that the precious metal just might have a saving grace.
"Gold has to overcome the resistance level at $1,480 to get new momentum. This will be hard to achieve in the short term, given continued ETF redemptions," analyst Carsten Fritsch with Commerzbank.
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