Gold Falls With Silver as Fed Officials Signals Sooner Rate Rise
London (Aug 17) Gold declined before the release of the Federal Reserve’s minutes from its July meeting after central bank officials signaled that U.S. interest rates could be increased at least once this year. Silver headed for the lowest close in three weeks.
Bullion for immediate delivery fell as much as 0.4 percent to $1,340.89 an ounce and traded at $1,342.73 at 10:58 a.m. in London as the dollar rose, according to Bloomberg generic pricing. Silver, sometimes treated as a more volatile version of bullion, is down a second day, retreating 0.8 percent to $19.6238 an ounce.
Gold’s 25 percent first-half rally appears to have petered out, with the metal climbing less than 2 percent since the end of June as the market prices the possibility of a sooner U.S. rate increase. New York Fed President William Dudley warned investors they are underestimating the likelihood of increases, and Atlanta Fed chief Dennis Lockhart said he’s confident growth is accelerating, setting the stage for one or two rises this year. The comments boosted the probability of a hike in December to 51 percent.
“Dudley was definitely the one who put the cat amongst the pigeons,” said David Govett, head of precious metals at Marex Spectron Group Ltd., a broker in London. “The move was exaggerated, catching the currency markets short dollars and long gold.”
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He said further direction is likely to come from the minutes of the Federal Open Market Committee’s July policy meeting, due for release Wednesday at 2 p.m. in Washington.
The FTSE/JSE Africa Gold Mining Index of South African producers’ shares jumped as much as 1.4 percent, the most in two weeks, as Harmony Gold Mining Co. Ltd. climbed 3.5 percent and Gold Fields Ltd added 2.4 percent.
In ETFs and other metals:
•Holdings in bullion-backed exchange traded funds added 5.25 metric tons to 2,032.9 tons on Tuesday, data compiled by Bloomberg show.
•Platinum declined 0.4 percent to $1,112.90 an ounce.
•Palladium dropped 0.7 percent at $697.82
Source: Bloomberg
