Gold fell on Thursday with prices backing down after summing a six-session gain of nearly 4%, after a Federal Reserve official said an interest rise should come sooner than thought.
Gold prices came under pressure on comments from St. Louis Fed President James Bullard that interest rate increases should come sooner rather than later. Also negative was a drop in crude oil prices as fears over conflict causing export disruption from Iraq eased further.
The precious metal had gained 4 percent since last Thursday and reached a two-month high on Tuesday at $1,325.90 on concerns over escalating violence in Iraq.
-Spot gold ended the session down 0.4% at $ 1,317 an ounce
Reports Thursday said China authorities have uncovered $15.2 billion illegal gold- financing scheme that dates back at least two years. That also put some downside price pressure on the yellow metal Thursday, due to the immediate uncertainty of the situation. Chinese officials recently broke up a big, illegal copper financing operation in China, which sunk the copper market for a short time.
The military crisis in Iraq is still an issue for markets, and especially gold, but lately has swayed from the front row. However the Iraq matter should come back to the spotlight soon and place its impact on some markets.
Physical gold demand in main consumer China remains lackluster, dealers said, with higher prices curbing some buying.
Crude Oil
Oil hit a nine-month high a week ago on fears that conflict in Iraq could split the country and hit oil exports, but it has since retreated slightly as production has been largely unaffected by the fighting.
Iraq`s southern oilfields, which produce the majority of the nation`s 3.3 million barrels a day, remained safe, said Nickolay Mladenov, United Nations special envoy to Iraq. But insurgents and Iraq government forces continued to fight on Wednesday for control of the country`s largest refinery, the 300,000-barrels-per-day Baiji complex, with troops being airlifted into the site by helicopter.
-Brent crude fell 92 cents to a $ 113.08 a barrel, having fallen in the past four sessions after hitting its highest since September at $115.71 last Thursday.
-U.S. crude fell by 89 cents to settle at $ 105.61 a barrel.
It had gained 47 cents in the previous session on news Washington would allow exports of condensate, ultra-light oil, in a marginal relaxation of a 40-year ban on U.S. oil exports.
On Tuesday, the U.S. Department of Commerce ruled that some energy companies may export a variety of ultra-light oil if it has been minimally refined, in what may be a marginal loosening of a decades-old ban on selling U.S. crude abroad.
Still, WTI lost ground after lackluster U.S. consumer spending data to revise down expectations for growth this quarter