Business news feedGold falls as dollar jumps after Fed minutes


Posted on Thursday, 21 August 2014 07:57

Gold falls as dollar jumps after Fed minutes

August 21, 2014, 10:00 am

By Frank Tang and Jan Harvey NEW YORK/LONDON (Reuters) - Gold prices fell on Wednesday as the dollar rallied on economic optimism after the minutes of the Federal Reserve's latest meeting showed the U.S. central bank has seen progress in the U.S. labour market. The Federal Reserve has been surprised by how quickly the U.S. labour market is healing but does not want to bring forward a planned rate hike until the recovery looks more convincing, according to minutes of its last policy meeting in late July. Strong economic data, including Tuesday's encouraging U.S. housing starts report, has weighed on gold's appeal as a hedge against economic uncertainties. "In the last 24 hours we had good U.S. housing data and that's one insight into the strength of the world's largest economy, which also seems to be the reason why the dollar became a lot stronger against the other currencies," Societe Generale analyst Robin Bhar said. Spot gold was down 0.4 percent at $1,290.21 an ounce by 2:42 p.m. EDT (1842 GMT), while U.S. COMEX gold futures for December delivery settled down $1.50 at $1,295.20. The dollar index jumped about 0.4 percent. Gold tends to suffer from strength in the dollar, in which it is priced, as this makes it more expensive for other currency holders. The metal managed to avoid heavy losses as global equities mostly halted their recent rally on Wednesday after Bank of England minutes showed two rate-setters voted earlier this month to raise interest rates. The S&P 500 index, however, turned slightly higher after the Fed minutes. Bullion investors will now turn their focus to Friday, when Federal Reserve Chair Janet Yellen will address an annual gathering of policymakers in Jackson Hole, Wyoming. Among other precious metals, silver was up 0.2 percent at $19.46 an ounce, while platinum dropped 0.7 percent at $1,421.75 an ounce and palladium fell 1.5 percent to $865.75 an ounce.

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