Gold Prices Dip to Six Week Low on Robust Dollar


Gold Prices Dip to Six Week Low on Robust Dollar

Gold prices fell to a six week low on Friday after the dollar strengthened against a basket of major currencies and traders readjusted their expectations on the timing of the Federal Reserve’s rate hike.

Gold for June delivery, the most actively traded contract, fell by more than $7.90 or 0.7% to settle at $1,174.56 a troy ounce on the Comex division of the New York Mercantile Exchange.

Spot gold fell by 0.8% to $1,174.11 a troy ounce.

The precious metal, had declined by more than 1.7% on Thursday, the highest drop in more than six weeks, to erase all of its April gains after a report was released showing that applications for jobless benefits fell to a 15 year low.

Gold had touched April high earlier this week but failed to hold on after the Federal Reserve said in its statement on Wednesday that it saw the current economic weakness as transitory and refused to rule out a rate hike as early as June.

“There is still fallout from the FOMC – there has been a hiccup in the U.S. recovery, but certainly the view is that interest rates are going up, so gold is struggling,” Simon Weeks, head of precious metals at the Bank of Nova Scotia, told Reuters.

“On a thin bank holiday weekend, that will be exacerbated.”

Investor hopes were further dampened by comments made by the Federal Reserve of Cleveland President, Loretta Mester, who refused to rule out support for the central bank increasing the lending rates during its June monetary policy meeting.

The weak economy was attributed to transitory factors like winter weather  with some traders having bought the commodity prior to the meeting on Wednesday on hopes that the flurry of weak economic data leading up to the meeting would cause the Fed to put off raising the rates this summer.

“Gold is starting to break down. The anticipation of rates going up by the end of the year is still in play,” Dan Pavilonis, a senior market strategist at futures brokerage R.J. O’Brien in Chicago, told the Wall Street Journal.

“That signals an improving economy.”

To contact the reporter of the story: Jonathan Millet at