Gold Ends Lower On Fed Rate Hike Speculation, Strong Dollar

Washington (Sept 10)   Gold futures shed early gains to end at a near three-month low on Wednesday, as global equity markets ticked higher with the dollar strengthening against a basket of major currencies amid speculation of a Federal Reserve rate hike happening sooner than earlier forecast.

A report from the San Francisco Federal Reserve on Monday said markets were underestimating the Fed's timeline for raising rates in light of mostly positive economic data, but may continue with its accommodative policy .

The strength in the US dollar has also dragged down many commodities lower this summer, with problems in  Europe  helping the safe haven greenback to a yearly high against a basket of major rivals.

Gold for December delivery, the most actively traded contract, dropped  USD3.2  or 0.3% to close at  USD1,245.30  an ounce on the Comex division of the  New York Mercantile Exchange  on Wednesday.

Gold for December delivery scaled an intraday high of  USD1,258.50  and a low of  USD1,244.50  an ounce.

On Tuesday, gold futures ended down  USD5.80  or 0.46% at  USD1,248.50  an ounce, near a three-month low.

Holdings of  SPDR Gold Trust  , the world's largest gold-backed exchange-traded fund, remained unchanged at 785.72 tons on Friday, from its previous close.

The dollar index, which tracks the US unit against six major currencies, traded at 84.33 on Wednesday, down from its previous close of 84.17 late Tuesday in North American trade. The dollar scaled a high of 84.42 intraday and a low of 84.05.

The euro trended lower against the dollar at  USD1.2901  on Wednesday, as compared to its previous close of  USD1.2938  late Tuesday in North American trade. The euro scaled a high of  USD1.2963  intraday and a low of  USD1.2884  .

In economic news from the US, a  Commerce Department  report showed wholesale inventories to have risen by a modest 0.1% in July, after inching up by a downwardly revised 0.2% in June. Nonetheless, the uptick in inventories fell short the forecast for 0.5% increase.

Source: AllianceNews