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Gold extends losses to hit 8-month low on Fed rate hike fears

Published 09/11/2014, 08:59 AM
Updated 09/11/2014, 08:59 AM
Gold drops to 8-month low on Fed rate hike fears

Gold drops to 8-month low on Fed rate hike fears

Investing.com - Gold futures extended losses to hit an eight-month low on Thursday, as expectations for higher U.S. interest rates continued to dampen sentiment for the precious metal.


On the Comex division of the New York Mercantile Exchange, gold for December delivery fell to a daily low of $1,237.80 a troy ounce, a level not seen since January 30.

Prices recovered to last trade at $1,243.30 during U.S. morning hours, down $2.00, or 0.16%.

A day earlier, gold futures lost $3.20, or 0.26%, to settle at $1,245.30.

Futures were likely to find support at $1,225.80, the low from January 9 and resistance at $1,272.60, the high from September 8.

Also on the Comex, silver for December delivery tumbled 17.8 cents, or 0.94%, to trade at $18.74 a troy ounce.

The U.S. dollar remained well bid after a study by the San Francisco Federal Reserve suggested that investors' expectations for rate hikes lag those of the Fed.

The research published earlier in the week underlined expectations that the Fed could signal a rate hike at its policy meeting next week, possibly by omitting mention of its commitment to keep rates low for a "considerable time".

Gold costs money to store and struggles to compete yield-bearing assets when interest rates are on the rise.

Market players shrugged off data showing that the number of people who filed for unemployment assistance in the U.S. last week rose unexpectedly to hit a ten-week high.

The U.S. Department of Labor said the number of individuals filing for initial jobless benefits increased by 11,000 to 315,000 last week from the previous week’s revised total of 304,000. Analysts had expected jobless claims to fall by 4,000 to 300,000 last week.

Losses were limited after U.S. President Barack Obama authorized air strikes against Islamic State militants in Syria.

U.S. President Barack Obama said Wednesday in an address to the nation that the U.S. would conduct a "systematic campaign" of airstrikes against Islamic State militants in Syria.

Elsewhere in metals trading, copper for December delivery retreated 2.7 cents, or 0.87%, to trade at $3.083 a pound.

Official data released earlier showed that Chinese inflation for August slowed to 2.0% on-year from 2.3% in July, below expectations for a reading of 2.2%.

The weaker than expected data underlined concerns about China's economy and sparked speculation policymakers in Beijing will have to introduce fresh stimulus to meet the government's 7.5% growth target.

China is the world's largest copper consumer, accounting for nearly 40% of global demand.

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