Gold Ends Lower As Dollar Strengthens
Wahington (Oct 10) Gold futures ended lower on Friday, after the dollar ticked higher against a select band of major currencies on signs of an improving US economy, even as global equity markets declined. The drop in gold prices comes even as the US Federal Reserve allayed fears of an early rate hike in its September monetary policy meeting minutes released earlier this week.
The Federal Reserve delivered a boost to gold on Wednesday by signaling interest rates will stay near zero through the first half of next year.
Investors have become more risk averse but with little faith in the precious metal as an alternative investment, with a global equities meltdown and concerns over the health of the global economy.
Meanwhile, European Central Bank President Mario Draghi reaffirmed the bank's commitment to lift inflation from its "excessively" low level through additional monetary easing.
Gold for December delivery, the most actively traded contract, dropped USD3.60 or 0.3% to settle at USD1,221.70 an ounce on the Comex division of the New York Mercantile Exchange on Friday.
Gold for December delivery scaled an intraday high of USD1,225.70 and a low of USD1,217.60 an ounce.
On Thursday, gold rebounded to end sharply higher after the US Federal Reserve's minutes from its September monetary policy meeting eased fears about a rate hike anytime soon.
Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, remained unchanged at 762.08 tons on Friday, from its previous close of 767.47 tons.
The dollar index, which tracks the US unit against six major currencies, traded at 85.87 on Friday, up from its previous close of 85.55 late Thursday in North American trade. The dollar scaled a high of 85.98 intraday and a low of 85.40.
The euro trended lower against the dollar at USD1.2625 on Friday, as compared to its previous close of USD1.2691 late Thursday in North American trade. The euro scaled a high of USD1.2715 intraday and a low of USD1.2610 .
In economic news from the US, a Labor Department report on Friday showed continued decline in US import prices in September, with fuel prices decreasing significantly. The import price index fell 0.5% in September following a revised 0.6% drop in August. Economists expected import prices to slide by about 0.7% compared to the 0.9% decrease originally reported for the previous month.
The UK visible trade deficit narrowed more-than-expected in August despite exports dropping to a near 4-year low, data from the Office for National Statistics showed Friday. The visible trade deficit decreased to GBP 9.1 billion in August from GBP 10.4 billion in July. The actual deficit was below the expected shortfall of GBP 9.6 billion .
Meanwhile, European Central Bank President Mario Draghi speaking at the Brookings Institute in Washington D.C. Late Thursday said, the governing council is "unanimous in its commitment to take additional unconventional measures to address the risks of a too prolonged period of low inflation."
"We are ready to alter the size and/or the composition of our unconventional interventions, and, therefore, of our balance sheet, as required," Draghi added.
Source: RTTnews
