LONDON: Gold prices dipped below $1,200 an ounce yesterday and silver slid to a four-and-a-half year low after the Federal Reserve ended its bond-buying stimulus programme with unexpectedly upbeat comments about the economy.
Spot gold fell as low as $1,199.90 an ounce and was down 0.6 percent at $1,204.20 an ounce at 1249 GMT. US December gold futures were down $20.70 at $1,204.20. Silver was down 2.3 percent at $16.65 an ounce, having earlier hit its lowest since March 2010 at $16.54.
The Fed statement on Wednesday sent the dollar to its highest since October 6, while US interest rate futures shifted to show better-than-even chances of a rate rise next September. Previously, they had indicated a rise in October.
That dented interest in gold, which as a non-yielding asset tends to benefit from ultra-low rates. “I’m not saying that we’re going to get a higher interest rate environment any time soon, but the signals are there,” Simon Weeks, head of precious metals at the Bank of Nova Scotia, said. “$1,200 might hold today, but overall I think it will be broken, and we’ll look at that double bottom at $1,180 again.”
Gold, which hit a 15-month low of $1,183.46 earlier this month — a level it bounced off in 2013 -- fell 1.3 percent on Wednesday after the Fed statement was released.
In a reflection of investor sentiment, the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings fell 1.2 tonnes to 742.40 tonnes on Wednesday, a six-year low. Among other precious metals, spot platinum was down 0.6 percent at $1,246.50 an ounce, while spot palladium fell 0.4 percent to $786.25 an ounce.
Reuters
