Gold prices have fallen to their lowest level since mid-January, after extending a decline during the New York trading session on Wednesday. The precious metal has been weakening since the U.S. Federal Reserve’s somewhat brighter economic outlook boosted the dollar and so investors moved out of the safe haven metal.
Gold and dollar usually tend to have an inverse price relationship, so when once rises, the other falls. Spot gold fell to $1,634.69 by 18:26 GMT, losing over $80 a troy ounce since the Fed policy meeting on Tuesday.
The US central bank hardly signalled any prospects for further monetary easing and instead offered a slightly brighter economic outlook, backed by a report that showed US retail sales rose higher in February to record the largest gain in five months.
Quantitative easing usually weakens a currency, due to bond buying by the central bank, which floods the economy with more money. Since the Fed has refrained from undertaking more QE, investors weren’t afraid to take on long positions in the dollar.