Gold futures Tuesday resumed slumps on speculation that the Federal Reserve may scale back U.S. debt purchases, curbing demand for the precious metal as a store of value.
Fed Chairman Ben S. Bernanke will discuss the economic outlook in congressional testimony and the central bank will publish minutes of its latest meeting Wednesday.
"Tomorrow's minutes are very important as there is some concern that the Fed may want to cut back on the stimulus," Michael Smith, the president of T&K Futures & Options in Port St. Lucie, Fla., said. "Also, the dollar's strength is working against gold."
Gold futures for June delivery fell 0.5 percent to settle at $1,377.60 an ounce at 1:43 p.m. on the Comex in New York.
Gold has tumbled 18 percent this year as some investors lost faith in the metal after equities rallied.
But investors who dumped shares in gold exchange-traded funds amid the biggest selloff in the metal in four years may be in for a shock: Capital-gains taxes are higher than for stocks and bonds. Profits from investments in ETFs that back their shares with physical holdings of precious metals face taxes as high as 28 percent for investments held at least a year. That's the rate the U.S. Internal Revenue Service applies to items it considers "collectibles," such as coins, art, silver and gold.
Long-term gains from stocks and bonds, including equity and fixed-income ETFs, are taxed at a maximum 20 percent.
"There are some tax surprises out there lurking for them when they go to sell," Tim Steffen, director of financial planning at wealth-management firm Robert W. Baird & Co. in Milwaukee, said of gold exchange-traded product investors.