Gold prices dip in Asia as investors take profits on overnight gains

Category: Commodities

Gold prices eased in Asia on Wednesday, trimming overnight gains linked to risk sentiment after deadly bombings in Belgium.Gold for April delivery on the Comex division of the New York Mercantile Exchange fell 0.92$ to $1,237.10 a troy ounce.Also on the Comex, silver futures for May delivery eased 0.76% to $15.765 a troy ounce, while copper futures shed 0.26% to $2.286 a pound.Overnight, gold futures rallied in North American trade on Tuesday, as a series of explosions in Brussels sparked a wave of risk aversion, boosting appetite for safe-haven assets.Risk sentiment took a hit after explosions tore through the departure hall of Brussels airport on Tuesday morning killing at least 26 people and injuring 35 others and a second blast struck a metro station in the capital shortly afterwards.The blasts at the airport and metro station occurred four days after the arrest in Brussels of a suspected participant in November militant attacks in Paris that killed 130 people.A day earlier, gold lost $10.10, or 0.81%, as investors digested comments from Federal Reserve officials on the timing of the next U.S. rate hike.Both San Francisco Fed President John Williams and Atlanta Fed President Dennis Lockhart said in separate news reports that a rate hike could come as early as next month. However, neither are voting members of the Federal Open Market Committee.

On Tuesday, Chicago Fed President Charles Evans said as long as inflation is "underrunning" the Federal Reserve's 2% target, there is time to assess the global risks and hold off on raising rates again, as it is critical to get inflation up and even risk going above that level.While it is true the economy is close to full employment, with unemployment at 4.9% and expected to fall further this year, "we have room to see how this plays out," Evans said in a speech to the City Club of Chicago. Evans, who is not a voter on the policy-setting Federal Open Market Committee this year, said the FOMC's "cautionary pause" after the initial rate increase in December was the appropriate response to the "bumpy" start to 2016 and the risks to global economic and financial conditions.The U.S. central bank surprised markets last week by cutting its rate hike projections more than expected, down from four to two in 2016, citing the potential impact from weaker global growth and financial market turmoil on the U.S. economy.Investors and economists dialed back their own rate hike expectations in wake of the Fed’s surprisingly dovish outlook, with traders of interest-rate futures now seeing no rate rise before September. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.