XAUUSD drops toward a two-month low, extending two weeks of losses, as investors assessed whether the U.S. economy is strong enough for the Federal Reserve to raise rates.
Fed Chair Janet Yellen said on Aug. 22 that policy makers must be certain the U.S. economy is on a solid footing before boosting interest rates and the debate is shifting toward when to scale back extraordinary accommodation. Speculation that the U.S. central bank would reduce stimulus as the economy recovered drove a 28 percent drop in gold last year. While borrowing costs have been near zero since December 2008, the Fed has cut monthly bond buying at each of the last six meetings.
Gold Bullion for immediate delivery lost as much as 0.5 percent to $1,274.45 an ounce, and traded at $1,277.69 at 2:51 p.m. in Singapore. The metal on Aug. 21 dropped to $1,273.14, the lowest level since June 18, as the minutes of the Fed’s last meeting signaled that policy makers may increase borrowing costs sooner than anticipated. U.K. markets are closed today for a holiday.
The dollar rose to the highest in 11 months against the euro and climbed to the highest since January versus the yen after Yellen said at a meeting of central bankers in Jackson Hole, Wyoming, that the U.S. labor market was healing.
Bullion is still 6.3 percent higher this year as tensions in the Middle East and Ukraine boosted haven demand. In eastern Ukraine, the armed conflict between government forces and pro-Russian rebels showed no signs of abating as Kiev announced a military spending increase before preliminary peace talks with Russian President Vladimir Putin tomorrow. Israel’s vow to keep striking Palestinian militants in the Gaza Strip prompted Hamas leaders to declare they’re not close to giving up.
Gold for December delivery lost 0.1 percent to $1,278.50 an ounce on the Comex in New York. Earlier, CME Group Inc., the world’s largest futures market, halted all of its Globex electronic-trading markets except for Malaysian equity-index derivatives for as long as four hours.
XAGUSD sank to the lowest in more than 10 weeks. XAGUSD for immediate delivery fell as much as 0.7 percent to $19.30 an ounce, the lowest since June 12, before trading little changed at $19.424. The metal last week completed a sixth weekly decline that’s the longest stretch since April 2013.
Spot platinum traded at $1,422.56 an ounce from $1,421.81 on Aug. 22, when prices capped two weeks of losses. Palladium decreased 0.5 percent to $884.40 an ounce.