Gold price slips after Fed comments boost dollar
New York (Sept 9) Gold slipped for a third day onFriday as hawkish comments on U.S. interest rates from a topFederal Reserve official helped lift the dollar to a sessionpeak, and as buyers continued to cash in on this week's pricerally.
The metal stayed on track for a second successive weeklygain after U.S. data fuelled talk that the Fed will hold offraising rates at its September policy meeting.
Spot gold was down 0.25 percent at $1,334.61 an ounceat 1325 GMT on Friday, while U.S. gold futures forDecember delivery were $3.30 lower at $1,338.30. Gold is 0.8percent higher on the week, having peaked at $1,352.65 an ounceafter rallying 1.8 percent on Tuesday.
Soft jobs and services data this week have dentedexpectations that ultra-low interest rates, a key support fornon-yielding gold, will rise this year. Markets remain uncertainon the outlook for rates, however, with Fed officials recentlytaking a more hawkish tone.
"We have no clear signal from the Fed," ABN Amro analystGeorgette Boele said. "On the one hand you have weaker data, and(gold) is supported a bit, but then the market gets distractedand it goes in the opposite direction."
"The problem with gold currently is that on the technicalsside we've now twice been around $1,375-1,380, so if it getsback towards there, people are just taking profits," she added.
A rebound in the dollar after Boston Fed President EricRosengren said the U.S. central bank increasingly faces risks ifit waits much longer to hike rates added to pressure on gold onFriday. Growing speculation that the Fed would stand pat on interestrates after hiking for the first time in nearly a decade inDecember have helped push gold 26 percent higher this year.
Expectations for further policy divergence between theUnited States and the euro zone were dampened after the EuropeanCentral Bank held off signalling a move towards further policyeasing at a meeting on Thursday. "The ECB's decision to leave policy unchanged may haverefocused market participants on the possibility that the Fedsends a hawkish signal in the coming days before its pre-meetingquiet period begins next Tuesday," BNP Paribas said in a note.
Holdings of the world's largest gold-backed exchange-tradedfund, SPDR Gold Shares , fell 0.13 percent to 950.62 tonneson Thursday. Gold demand in Asia remained subdued this week as higherprices kept buyers at bay. Silver was down 0.6 percent at $19.48 an ounce, whileplatinum was 0.7 percent lower at $1,075.20 an ounce.Palladium was down 0.7 percent at $677.85.
Source: Reuters
