Gold held a drop from a three-week high after the Federal Reserve said the economy was expected to pick up following a first-quarter slowdown, boosting speculation that interest rates will rise this year. Bullion for immediate delivery traded at $1,204.27 an ounce at 11:31 a.m. in Singapore from $1,204.71 on Wednesday, when prices fell 0.6 percent, according to Bloomberg generic pricing. The metal climbed to $1,215.16 on April 28, the highest level since April 7. Gold in Shanghai fell.

The Federal Open Market Committee “continues to expect that, with appropriate policy accommodation, economic activity will expand at a moderate pace,” it said in a statement on Wednesday. The economy grew at a 0.2 percent annual rate last quarter from 2.2 percent in the prior three months, Commerce Department data showed earlier yesterday. The Fed has held interest rates near zero since 2008 to support the economy.
“It gives it a good platform if it consolidates around here to either withstand a rise in the U.S. dollar when those interest rates do come,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “Or, as markets start to push out that event happening, a further fall in the U.S. dollar, which would benefit.”
Higher rates typically drive investors to favor assets with better yield prospects, such as equities. Gold remains 1.8 percent higher in April after losing 7.8 percent in the previous two months on speculation the central bank was getting ready to raise borrowing costs for the first time since 2006.

 ETP Holdings

The Bloomberg Dollar Spot Index fell 0.5 percent on Wednesday to cap a six-day slump, the longest losing streak since August 2013. The gauge was little changed on Thursday. Holdings in exchange-traded products backed by bullion rose for a second day on Wednesday and have increased 3.1 metric tons in April, according to data compiled by Bloomberg.
Gold for June delivery dropped 0.5 percent to $1,204 an ounce on the Comex, extending Wednesday’s 0.3 percent loss. Bullion of 99.99 percent purity fell 0.4 percent to 240.46 yuan a gram ($1,206.37 an ounce) on the Shanghai Gold Exchange. Silver for immediate delivery was 0.1 percent lower at $16.5369 an ounce, down 0.8 percent this month. Platinum was at $1,152 an ounce from $1,154.19, set for a monthly gain.
Palladium traded at $782 an ounce from $782.75 on Wednesday. It’s gained 6.2 percent in April to head for the biggest monthly increase since July 2013.
Source: http://www.bloomberg.com/