NEW YORK/LONDON: Gold fell 0.7 percent yesterday, 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 US 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.
The yellow metal largely ignored geopolitical factors ahead of US President Barack Obama’s speech to outline a strategy against Islamic State, a group in Iraq whose savage methods have included the beheading of two American captives.
Investors were anticipating a more hawkish stance on monetary policy from the Fed’s Open Market Committee (FOMC) at its next policy meeting on September 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 $1,246.56 an ounce and was down 0.6 percent at $1,248.30 an ounce at 1606 GMT.
Those prices were less than $10 above $1,240.69, bullion’s lowest price since February.
US COMEX gold futures for December delivery outperformed spot, up 40 cents at $1,248.90.
The dollar index held near Tuesday’s 14-month high, up 0.1 percent against a basket of currencies. A recent pullback in crude oil prices, which fell 1 percent yesterday, also broadly pressured precious metals. Reuters
