Furthermore, gold price also appears to have touched the downward trending support in which case it would trigger an upward rebound. Thursday’s early drop to $1046 drew perilously near the 2010 depth of $1044, and closely approached a new six-year low. A rise at the December 15-16 policy meeting would be the first in almost a decade.
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The euro rose 0.7 versus the dollar after the rate decision.
Asian stock markets wavered on Wednesday after downbeat USA manufacturing data raised questions about how aggressive the Federal Reserve would be when hiking interest rates, while the dollar retreated from 8-1/2-month highs. Oil dipped on Wednesday as an unexpected rise in USA stockpiles worsened oversupply concerns, stemming from expectations that OPEC will keep its output target unchanged at a policy meeting on Friday.
“Gold rallied off the dollar breaking”, said Charles Nedoss, a senior market strategist with LaSalle Futures in Chicago.
“Market participants are clearly convinced that the U.S. Federal Reserve will raise interest rates”, Commerzbank analysts including Daniel Briesemann said in a note.
Gold’s inferior cousin silver dropped 0.9% this morning to $13.83, the lowest level since August 2009.
At the same time, speculation of an interest rate hike is having a positive impact on the U.S. currency (by attracting foreign investors back into the United States market) and therefore making it more expensive for worldwide investors to purchase gold (which is priced in USA dollar terms), thus hurting demand.
The data came shortly after the Department of Labor said the number of individuals filing for initial jobless benefits in the week ending November 28 increased by 9,000 to 269,000 from the previous week’s total of 260,000.
She has been adamant about raising rates before the year concludes, citing concerns over an expedited tightening cycle if the Fed waits until 2016.
The dollar weakness likely required some bullion investors to unwind and cover their short positions in the precious metal, prompting the gains during the last two days. Holdings in the SPDR Gold Trust, the largest gold ETP, shrank 2.4 percent on Wednesday to 639.02 metric tons, data on the fund’s website show.
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Elsewhere in metals trading, silver futures for March delivery fell 0.12% to $14.060 a troy ounce, while copper futures for March delivery slid 0.22% to $2.054 a pound.
