Gold near lowest in seven months on Fed rate hike fears
New York (Sept 10) Gold fell 0.6 percent on Wednesday, trading near its lowest in seven months at just over $1,240 an ounce, pulled down by fears that encouraging economic data could prompt the U.S. Federal Reserve to raise interest rates sooner than expected.
Bullion's losses weighed on platinum and palladium for a second day, while keeping silver under the key $19 mark.
News Russia had removed the bulk of its forces from Ukraine also dampened safe-haven demand, fueling hopes for peace after a conflict that has taken more than 3,000 lives.
Investors were anticipating a more hawkish stance on monetary policy from the Fed's Open Market Committee (FOMC) at its next policy meeting on Sept. 16-17, after a study from the San Francisco Fed released on Monday showed that investors underestimated the speed at which the Fed might raise rates.
"While bullion prices at current levels reflect, to an extent, expectations for tighter monetary policies, it does not preclude prices from falling further should the upcoming FOMC statement be viewed as more hawkish than anticipated," said James Steel, chief precious metals analyst at HSBC.
Spot gold hit its weakest since early June at $1,243.56 an ounce and was down 0.6 percent at $1,248.21 an ounce by 2:40 p.m. EDT (1840 GMT).
Those prices were less than $10 above $1,240.69, bullion's lowest price since February.
U.S. COMEX gold futures for December delivery settled down $3.20 at $1,245.30.
Market participants will closely monitor U.S. President Barack Obama's speech Wednesday night outlining a strategy against Islamic State, a group in Iraq and Syria whose savage methods have included the beheading of two American captives.
The dollar index was little changed against a basket of currencies, hovering near Tuesday's 14-month high. A recent pullback in crude oil prices, which fell over 1 percent on Wednesday, also broadly pressured precious metals.
Prices got little support from demand for physical metal in Asia, the leading market for gold, dealers said.
In India, the second-largest gold buyer, Trade Minister Nirmala Sitharaman said the government is not considering an immediate cut in gold import duty.
Among other precious metals, silver was down 0.7 percent at $18.90 an ounce. Spot platinum edged lower by 0.3 percent to $1,376 an ounce, and spot palladium was down 1.1 percent at $846.90 an ounce.
Platinum fell to its lowest since early February at $1,372.70 an ounce, while palladium hit a one-month low of $842.50 an ounce, having fallen 2.3 percent on Tuesday.
Source: Reuters
