Gold Drops Sharply Below $1260 as U.S. Dollar Rallies
Gold prices settled lower on Thursday as brighter prospects for the U.S. economy and the dollar dimmed the metal’s appeal.
Bullion got little impetus from the European Central Bank’s dramatic decision to cut three separate interest rates, as well as purchase asset-backed securities, in a bid to jumpstart Europe’s languid economy.
U.S. gold futures for December delivery ended the session $3.80 lower at $1,266.50 an ounce. Spot gold was last down 0.5 percent at $1,263 an ounce. The dollar index rose 1.2 percent against a basket of currencies.
The metal fell to a low of $1,261.19 on Wednesday, its weakest since mid-June, before closing with a small gain.
Gold, seen as an alternative investment during times of geopolitical and financial uncertainties, has gained about 5 percent this year amid tensions in Ukraine and the Middle East.
But bullion investors continue to worry over strong U.S. economic data and its impact on the dollar.
In recent days, a string of encouraging U.S. economic data, along with a sell-off in the euro and the yen, has boosted the dollar. A stronger greenback hurts dollar-denominated gold as it makes the metal more expensive for holders of other currencies.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund and a good measure of investor sentiment, said its holdings fell 2.69 tons to 790.51 tons on Wednesday.
U.S. non-farm payrolls data due on Friday will be closely watched for further clues about the economy and the outlook for the Federal Reserve’s monetary stimulus.
Among other precious metals, platinum and palladium – used in auto manufacturing – gained as U.S. August auto sales were the highest for that month in more than a decade.
Source: CNBC
