Gold gained in New York amid speculation that the 3-month low will increase purchases.
Bullion dropped 7% from the almost 4-month high of July 10 when geopolitical anxiety spurred demand. The metal had been affected by tension between the West and Russian over Ukraine. Ukrainian President Petro Poroshenko reported that Russia had withdrawn above two-thirds of troops from its countries amid the meeting of EU governments to impose new sanctions on Russia.
The decline took gold towards a level that suggests to traders the possibility of a price hike.
According to Bloomberg, the dollar reached a 14-month high today against the basket of 10 main currencies. Economists are expecting an improvement in retail sales and a decline in jobless claims adding to the Federal Reserve increasing interest rates in 2015.
AnandRathi Commodities Ltd analyst, Abhishek Chinchalkar said, “Market participants continued reducing their bullish bets in the metal on the strengthening dollar. With prices at a three-month low, buyers of the physical yellow metal could step in at these levels.”
On Wednesday, the dollar index was near the 14 month high of Tuesday and spot gold dropped 0.3% at $1,252.10 per ounce as reported by Reuters.
Jonathan Butler, Mitsubishi precious metals analyst said, “It’s hard to see any major catalyst to the upside (for gold) in the short term. Next week, we have the FOMC meeting and no doubt we will see some choppy price action in anticipation of the next move from the Fed.”
He added, “If predictions are believed, the Fed is going to outline not only its timetable for ending quantitative easing, but also the potential for a rise in interest rates in the first half of next year. Some pricing in of that may result in further gold weakness.”
December delivery futures for US gold were up $4.50 per ounce at $1,253.00 but had fallen yesterday to $1,248.10.
To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/
To contact the reporter of the story: Jonathan Millet at email@example.com