Tags: gold | silver | Fed | Yellen

Gold Down 1 Percent, Below $1,300 on Fed Report, Dollar Rise

Tuesday, 15 July 2014 04:03 PM

Gold prices fell 1 percent on Tuesday, dropping below $1,300 an ounce as bullion investors focused on a U.S. Federal Reserve monetary policy report showing the central bank is set to end its bond-buying stimulus in October.

Gold posted its biggest two-day losses since Oct. 1, having lost nearly 3.5 percent between Monday and Tuesday.

The metal briefly rose after Fed Chair Janet Yellen told a Senate committee that U.S. labor markets are far from healthy and signaled the Fed will keep monetary policy loose until hiring and wage data show the effects of the financial crisis are "completely gone."

In an accompanying report, however, the Fed said its balance sheet would top out at $4.5 trillion when its bond-buying program ends in October, a timeline consistent with what Fed policymakers had said previously.

"Yellen defending the current policy was expected but ultimately rates will be hiked and investors won't have reason to hold gold," said VTB Capital analyst Andrey Kryuchenkov.

Spot gold was down 1 percent to $1,293.64 an ounce by 3:20 p.m. EDT, having earlier dropped to $1,291.70, the lowest since June 19.

The metal's losses accelerated in late New York morning trade when prices slipped below the $1,300 mark for the first time in nearly a month, and as the dollar index started to rally.

Gold appears to have found technical support and rebounded off its 50-day moving average near $1,292 an ounce.

Bullion extended Monday's 2.3 percent loss, its biggest daily drop since December, as fading fears over Portugal's banking sector prompted investors to take profits, triggering stop-loss orders.

U.S. gold futures for August delivery settled down $9.60 to $1,297.10 an ounce, with trading volume about 30 percent above its 30-day average, preliminary Reuters data showed.

The metal had posted three consecutive weeks of gains, reaching a near four-month high of $1,345 on July 10 on increased buying after banking troubles in the eurozone periphery drove investors toward assets perceived as safer.

Investment demand has underpinned prices. Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose by 8.68 tons to 808.73 tons on Monday.

Among other precious metals, platinum slipped by 0.6 percent to $1,478.50 an ounce, while palladium was down 0.4 percent to $864.08 an ounce and silver fell 0.8 percent to $20.72 an ounce.

© 2019 Thomson/Reuters. All rights reserved.

   
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Gold prices fell 1 percent on Tuesday, dropping below $1,300 an ounce as bullion investors focused on a U.S. Federal Reserve monetary policy report showing the central bank is set to end its bond-buying stimulus in October.
gold, silver, Fed, Yellen
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2014-03-15
Tuesday, 15 July 2014 04:03 PM
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