Gold struggled to recover from overnight losses on Thursday as the Federal Reserve’s optimism over the US economy boosted the dollar, and a poll showed softer support for a Swiss referendum that would have forced the central bank to boost its gold reserves.
An opinion poll showed on Wednesday that support among Swiss voters for the ‘Save our Swiss gold’ proposal had slipped to 38 per cent, down from 44 per cent in a survey conducted last month.
Under the proposal, the Swiss National Bank would be banned from selling any of its gold reserves and would have to hold at least 20 per cent of its assets in the metal compared with 7.8 per cent last month. The central bank purchases could have boosted gold prices.
“The Swiss vote was the only bright spot for gold in recent weeks and expectations had been building up,’’ said a precious metals trader.
“This new poll shows that the possibility of this proposal passing is getting slimmer.’’
Spot gold eased 0.2 per cent to $1,180.99 an ounce by 0336 GMT, after dropping 1.2 per cent in the previous session. US gold futures slid 1 per cent to $1,181.80, while silver futures also lost more than 1 per cent.
Minutes of Fed policy meet
Bullion also came under pressure after the minutes of the Fed’s October policy meeting showed policymakers were concerned about weakening inflation pressure, dampening the metal’’ appeal as a hedge, and were confident about the US economy.
Gold is often seen as a hedge against inflation and sluggish economy, but recent strong data has dulled its appeal.
Selling by gold funds resumed after a brief pause this week. SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.3 per cent to 720.91 tonnes on Wednesday - close to a six-year low.
Among other precious metals, platinum briefly slipped into a discount to gold before recovering to trade at a premium of about $5 an ounce.
“Platinum historically trades at a premium to gold and a push towards a discount would be highly unusual,’’ HSBC analysts said in a note.
“While platinum prices may be held hostage to gold’s negative performance, we remain bullish on platinum and palladium on expectations that the market will remain in a supply and demand deficit this year and the next.’’