The growing value of the world's reserve currency and the economy it supports dragged down gold futures on Thursday as the yellowish metal sank to its lowest rate since early February, according to Bloomberg.
Demand for bullion as a storage haven has been steadily dropping. Just last year the yellowish metal endured its first yearly losses in 12 years, dropping 28 percent amid anticipation that the U.S. Federal Reserve was preparing to close the economy-spurring asset purchase program. Silver futures also lost value during the Thursday trade session, tracking the performance of gold futures.
The U.S. dollar drove to its top value in almost 90 days against the common currency of the European Union on Thursday, still relishing in the aftermath of better-than-forecast economic data about U.S. durable goods orders. The dollar also climbed against the euro amid confidence the European Central Bank will augment stimulus measures.
"We expect gold to struggle against the backdrop of improving U.S. macro-economic fundamentals," states a Thursday report authored by analyst Abhishek Chinchalkar with AnandRathi Commodities Ltd., according to Bloomberg.
At 9:17 a.m. on Thursday, gold futures dropped 0.29 percent, a $3.63 loss to $1,254.51 per troy ounce. At 9:17 a.m., silver futures edged down 0.63 percent, a 12-cent slip to $18.91 per troy ounce.
Tension tames between Russia, Ukraine
As Group of Seven leaders prepare to convene next week in Belgium, Russia appears to be easing its efforts against Ukraine. The relaxation of tension in one of the world's more prominent hotspots also reduced demand for bullion as a storage haven.
Sanctions against Russia levied by Western nations are unlikely to be expanded, according to the administration of German Chancellor Angela Merkel.
Earlier this week, European leaders opted to delay additional sanctions against Russia after President Vladmir Putin of Russia demonstrated he is open to merging efforts with newly elected Ukraine President Petro Poroshenko.
The Russian leader issued an order earlier this week to draw back some troops that were amassed near the border.
"The background support from Ukraine seems to be fading," macroeconomic strategist Sun Yonggang with Everbright Futures Co. in Shanghai told Bloomberg on Thursday.
Smart investment while lower in value
With a record price of $1,923 per troy ounce as established in September 2011, gold now is an alluring purchase due to the reduced price and the opportunity for investors to get a good deal when purchasing, according to an opinion column authored by an editor with MarketWatch.
Bullion kicked off the year at about $1,200 per troy ounce, which represents a reduction of about 35 percent from those September 2011 record-high values.
But during the past five-plus months, the yellowish metal has progressively climbed in value, edging up about 6 percent during that period.
By the end of this year, the price of gold will gain as much as 15 percent, the column states.
Anticipation spreads about ECB
Reuters reports gold futures' losses on Thursday mark a third consecutive trading session of slippage, some of which was prompted by activity on the other side of the Atlantic Ocean.
As policy makers with the European Central Bank prepare to convene late next week, investors, analysts and traders are watching closely to determine the likelihood of a reduction to borrowing costs.
The body also is poised to implement a refinancing measure that drives toward bolstering the standing of regional businesses. Policy makers are slated to convene meetings next Thursday.
"There is some further strengthening of the dollar to come potentially and that should similarly put pressure on gold and on a macro level attract some further buying of U.S. treasuries, pushing down the yields," analyst Jonathan Butler with Mitsubishi Corp. told Reuters on Thursday.
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