By Claudia Assis and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures ended sharply lower Wednesday, tracking losses for most commodities and U.S. equities and as the metal reeled from failing to trade above $1,700 an ounce in the previous session.
A higher dollar also contributed to gold’s fall.
Gold for April delivery GCJ2 -1.41% slipped $27, or 1.6%, to settle at $1,657.90 an ounce on the Comex division of the New York Stock Exchange.
The June contract GCM2 -1.41% , which has the most open interest, declined $27.20 to end the day at $1,660.50 an ounce.
“We couldn’t take out $1,700 and there’s definitely some disappointment in there,” said Frank Lesh, an analyst with FuturePath Trading in Chicago.
As the April contract nears expiration, “we are seeing people coming out of April and not seeing them roll yet, they are not committing to June just yet,” he added.
The metal shot higher earlier this week after Federal Reserve Chairman Ben Bernanke signalled U.S. interest rates would remain at current ultra-low levels for a few years.
It ended modestly lower on Tuesday, however, after being just a few dollars away from the psychologically important $1,700 an ounce.
Fundamentals for gold remain solid, analysts said.
“Low interest rates and longer-term inflationary pressures should remain supportive for gold prices,” strategists at Barclays Capital said.
Analysts at Goldman Sachs said gold prices remain too low relative to the low interest rates.
“As we look forward, our U.S. economists expect subdued growth and further easing by the (U.S. Federal Reserve) in 2012, which should push the market’s expectations of real rates back down near (zero basis points) and gold prices back” to Goldman’s six-month forecast of $1,840 per ounce, the analysts said in a note to clients earlier this week.
A higher dollar also contributed to gold’s fall. The dollar index DXY -0.02% , which compares the U.S. unit to a basket of six currencies, traded at 79.210, up from 79.087 in late North American trading on Tuesday. Read more on currencies.
A higher dollar is a negative for gold and other dollar-denominated commodities as it makes them more expensive for holders of other currencies.
Meanwhile, protests in India against tax hikes on non-branded gold jewelry and gold imports stretched into their second week on Wednesday, with local media reporting some jewelers and traders were holding a day-long hunger strike against the levies. Read more about the jewelers’ strike.
India is the world’s top gold consumer, and the demonstrations are reportedly frustrating imports during a seasonally strong period for demand.
The broader metals complex tracked gold lower, with copper leading the declines.
May copper HGK2 -2.05% shed 9 cents, or 2.3%, to $3.79 a pound.
Shares of mining giant Freeport-McMoRan Copper & Gold Inc. FCX -0.05% declined 4.5%.
Also not boding well for copper and other metals more closely related to industrial uses, data earlier this week from China’s National Bureau of Statistics showed a 5.2% drop in profits for China’s largest industrial groups during the first two months of the year.
Chinese shares trading in Shanghai dropped the most among Asian bourses on Wednesday on the heels of the data.
Earlier Wednesday, U.S. government data showed durable-goods orders rising 2.2% in February, slightly below expectations of an increase of 2.9% in the month. Read more on durable goods.
Palladium for June delivery PAM2 -2.44% lost $15.65, or 2.4%, to $647.35 an ounce, while the April contract for sister metal platinum PLJ2 -1.27% dropped $22.30, or 1.4%, to $1,635.20 an ounce.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Virginia Harrison is a MarketWatch reporter based in Sydney.