(Reuters) - Palladium on Monday slumped about 7 percent, its biggest daily percentage drop in over two-years, while gold also fell as strong U.S. data improved investors’ appetite for riskier assets ahead of the U.S. Federal Reserve policy meeting.
Spot palladium slid about 6.7 percent to $1,366.01 per ounce as of 1:57 p.m. EDT (1757 GMT).
It fell as much as 7 percent to a low of $1,361.5 earlier in the session, its biggest one day decline since January 2017.
“This dramatic sell-off is a bit technical in nature as we started sliding through some key support levels as an extension of the downside with exasperated long liquidation in the market,” said David Meger, director of metals trading at High Ridge Futures.
The metal, primarily used to curb harmful emissions from vehicle engines, has plummeted about 16 percent from a record high of $1,620.52 hit last month.
Spot gold fell 0.5 percent to $1,279.32 per ounce, while U.S. gold futures settled about 0.6 percent lower at $1,281.50 an ounce.
“The equities markets, at least in the U.S., are at new recent highs and we are seeing less need for the safe-haven status of the metal,” Meger said.
Global shares edged higher as the S&P 500 touched an intraday record after data showed U.S. consumer spending increased by the most in more than 9-1/2 years last month.
The recent uplift in equities has led investors to cut their exposure to gold, with holdings of SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, falling to its lowest since Oct. 19 at 746.69 tonnes on Friday.
Holdings have fallen by over 3 percent since the beginning of this month.
Speculators also increased their bearish wagers on COMEX gold in the week to April 23, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
“You’ve got a lot of people taking profits after a three-day run-up. But, a lot of people are going to take it easy as we have the Fed on Wednesday,” said Michael Matousek, head trader at U.S. Global Investors.
“That’s going to be big and everyone is going to take a big position before that in case something obscure comes out.”
The Fed will begin its two-day policy meeting on Tuesday. The central bank last month abandoned any interest rate hikes this year.
Elsewhere, silver fell 1.1 percent to $14.90 per ounce, while platinum dipped 0.2 percent to $893.
Reporting by K. Sathya Narayanan, Swati Verma and Diti Pujara in Bengaluru; Editing by Tom Brown