Spot gold falls after Fed minutes

Frankfurt (Aug 21)  The price of gold fell further on the European spot market on Thursday after minutes from the US Federal Open Market Committee's latest meeting raised the prospect of a sooner-than-expected interest rate hike.

Spot gold was down 0.9 per cent at $US1,280.03 a troy ounce in morning European trading.

According to the minutes, released Wednesday, if the FOMC's employment and inflation objectives are met ahead of expectations, "it might become appropriate to begin removing monetary policy accommodation sooner than currently anticipated," said James Steel, an analyst at HSBC.

Gold prices have benefited from the Fed's loose monetary policy in recent years, reflecting the metal's traditional appeal as a hedge against inflation and currency debasement.

A speech by US Federal Reserve Chair Janet Yellen at the Jackson Hole central bankers' symposium Friday is likely to have little impact on gold prices, said Credit Suisse analyst, Tom Kendall.

Instead, "the markets are much more focused on what Mario Draghi is going to say there," he said.

"I don't think there's anything Yellen can say that is going to be more dovish than the market had already priced in," said Mr. Kendall. "The only thing that she can surprise on is to be less dovish, which isn't going to be bullish for gold."

In other precious metals, silver was down 0.6 per cent at $US19.350 an ounce, palladium was at $US868.40 an ounce, up 0.6 per cent, and platinum was down 0.2 per cent at $US1,419.20 an ounce.

Source: BusinessSpeculator