Gold slips after hawkish Fed minutes, Jackson Hole meeting eyed
ecPulse
2014-08-21 06:49AM UTC
Gold prices extended losses on Thursday, dropping to a 2-week low, after hawkish minutes from the latest Federal Reserve Policy meeting showed that the central bankers were surprised at the speed of the jobs recovery. Spot gold prices tumbled on Thursday, falling 1.02 percent or 13.19 points to trade at $1,280.10 compared with an opening level of $1,290.62. Investors feared a stringer jobs market and modestly better-than-expected data could prompt the Federal Reserve to increase rates soon. Higher interest rates would dull the appeal of non-interest bearing assets such as gold. Gold prices were hit by a stronger dollar, where the USDIX index rose sharply to trade at 11-month highs against a basket of major currencies following hawkish U.S. central bank’s minutes. Dollar rose sharply on Wednesday, extending gains into the Asian session to trade at 82.30 after opening at 82.29. Today’s slate of data is more than just an appetizer leading up to Fed’s Chief Janet Yellen’s speech on Friday at an annual gathering of central bankers in Jackson Hole, Wyo. The first to hit will be the initial weekly unemployment claims report followed by existing home sales. In other markets: - Spot Silver fell 0.66% to trade at $19.37 - Spot Platinum dropped 0.39% to $1,422.550 - Spot Palladium declined 0.23% to trade at $866.90 Political Uncertainties Continued violence in Ukraine and the Middle East may be prompting investors to seek safety in gold. Heavy fighting between government forces and pro-Russia rebels raged across eastern Ukraine on Wednesday, despite calls for a cease-fire from Russia and Europe. In the Middle East, Israel suspended cease-fire talks with Palestinian factions after a barrage of rockets from Gaza struck its territory. Meanwhile in Iraq, fighting continued with government and Kurdish forces making gains against Islamic militants with the help of U.S. airstrikes. Meanwhile, SPDR Gold Trust, the world`s largest gold-backed exchange-traded fund, said its holdings rose 0.9 tonnes to 800.09 tonnes on Wednesday - a third straight day of increase.
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