Gold Price Today Shrugs Off Bearish Data

Amid a robust rally for U.S. equities, and a slightly hawkish tone in the minutes from the U.S. Federal Reserve's latest meeting, the gold price today (Wednesday) ended with modest losses.

June gold gave back $4.70 to $1,290 an ounce today. The spot gold price slipped $4.00 to $1,290.75 an ounce.

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As has been the case all week, gold prices remained in a tight trading range Wednesday. The yellow metal showed little reaction to April's Federal Open Market Committee (FOMC) minutes. Released Wednesday afternoon, the minutes revealed the U.S. central bank did discuss a "rate hike process" in April. Yet, it still sees no inflation risk.

Both revelations are bearish for gold. But, yellow metal managed to shrug off the news.

Little movement in gold prices are expected for the rest of the week, according to David Govett, manager of precious metals brokerage Marex Spectron.

"We remain range-bound and the markets show no real signs of wanting to change that...with a U.S. and U.K. bank holiday approaching on Monday, there is no real reason for excitement," Govett told MarketWatch. "Unless we get any news from Ukraine or South Africa, expect things to continue in the same vein for the time being."

Even an uninspiring report on Q1 2014 gold demand didn't rattle the yellow metal...

Gold Price Up Despite WGC Report

Gold prices rose a modest $0.80 to $1,294 an ounce Tuesday, maintaining its tight trading range, after the World Gold Council's said Q1 2014 demand remained largely the same from a year ago.

WGC data showed gold demand stood at 1,074.5 tons in the first quarter, unchanged year over year (YOY).

Gold demand for jewelry, however, posted a moderate increase. Buoyed by robust gold jewelry making demand in China, demand in this segment grew 10% to 570.7 tons in Q1. That was the largest Q1 volume since 2005.

A gain in jewelry making gold demand is attributed to lower gold prices at the start of this year, compared to prices in Q1 of 2013. Gold started 2014 at $1,225 an ounce and ended Q1 at $1,291 an ounce. In contrast, gold prices averaged $1,670.95 an ounce in January 2103 and ended Q1 2013 at $1598.25.

Still, lower gold prices in this year's first quarter failed to goose demand for bars and coins, which fell 39% YOY. A large part of that decline can be traced to one big factor: waning Asian gold investment and collectible demand.

China, the world's biggest yellow metal buyer, purchased 18% less gold in Q1 2014 than 2013's first quarter. The decline was driven by a steep 55% plunge in China's gold bar and coin purchases. India, the world second biggest gold consumer, logged a 26% decline.

The sharp drop in gold bar and coin purchases wasn't unique to emerging markets. Indeed, worldwide bar and coin demand tumbled 52% versus a year ago, reaching a four-year low.

Outflows from gold exchange-traded funds (ETFs) significantly slowed in Q1 2014, compared with the same quarter a year ago. ETF selling decelerated to 0.2 tons.

The WGC explained that this year's lackluster gold action is a stark reversal from 2013. Last year, amid heavy Western selling and falling prices, savvy investors were quick to buy the dips. That's not the case this year.

"In late 2013 and early 2014 there was a general expectation that the gold price would fall further. As this failed to materialize - and gold prices steadily increased during Q1 - investors in many of the more price-sensitive markets assumed a 'wait and see' stance until a clearer price trend emerged. Consequently, total bar and coin demand subsided to its lowest level for four years. A degree of profit-taking also contributed to the year-on-year decline. The opportunistic buying that accounted for a portion of last year's surge resulted in some of these relatively tactical buyers closing out of their positions as the price rose over the course of the quarter," the WGC report read.

The gold price is up 7.7% year to date. But, it's down more than 6% since it peaked for the year at $1,385 an ounce on March 14.

So, what does this mean for investors?

"With gold trading at roughly $1,300 an ounce, many investors are asking themselves if now is the time to buy gold. I think that's the wrong question," said Money Morning Chief Investment Strategist Keith Fitz-Gerald. "What they should be asking themselves is if they can afford not to buy it right now. The case for owning gold has never been more clear..."

Keith laid out his five reasons for investing in gold in 2014, plus two steps to take now to get started. You can read it here.

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