Thursday, 21 August 2014

Gold drops to 2-month low as dollar gets boost from hawkish Fed

Gold extended losses to a fifth session on Thursday, sliding 1 per cent to its lowest in two months, after the US dollar strengthened on indications from the Federal Reserve that it could raise interest rates sooner than expected. 

A surprisingly strong recovery in the US job market could lead the Fed to raise interest rates earlier than it had been anticipating, minutes from the Fed's July meeting showed, although most officials wanted further evidence before changing their view. 

Spot gold fell as much as 1.2 per cent to $1,276.90 an ounce, its lowest since June 19, before recovering slightly by 0635 GMT to trade down 0.9 per cent at $1,280.04. 

US gold dropped as much as 1.6 per cent to $1,274.90, also a two-month low. 

Safe-haven gold failed to gain support despite a dip in Asian shares that came under pressure as a disappointing Chinese manufacturing survey stoked concern about the regional giant. 

The US dollar traded at 11-month highs against a basket of major currencies because of the slightly hawkish tone in the US central bank's minutes. 

More data on Thursday on US weekly jobless claims and eurozone and US manufacturing data could trigger further sell-offs in gold. 

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