Gold futures dropped to $1,073.30 an ounce this year through Tuesday on the Comex in NY. A shift to safety yesterday helped gold as well as declines in the U.S. dollar which is now at 99.46 after trading at the 100 limit as the week opened. The dollar was up 0.1 percent against a basket of major currencies, trading close to an eight-month high reached in the previous session.
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Gold remains dependent on the USA interest rate expectations and further dollar appreciation could cause prices to decline towards US$1050 and possibly lower, he added.
The US Federal Reserve watch the report closely, as increasing wages and salaries is an indication of inflation and less slack in the labour market, which the Fed is duty-bound to control. Now it is around 10% down since the beginning of the year against the U.S. dollar, but this pretty well mirrors the rise in the United States dollar index over the year to date, so the fall has not been almost so great in many other global currencies – indeed the price is actually still higher in a number of them since January 1. The demand for physical gold in 2015 has been on the rise.
Gold traders also are looking ahead to the release of the November U.S. employment report, due out December 4, which will be key to the Fed’s upcoming interest rate decision.
Higher rates would dent the appeal of non-interest-paying bullion, while boosting demand for the dollar.
Gold’s monetary value fell to its lowest point in about six years Friday.
“People are preparing for the rate hike… if you look at strategists’ recommendations of the top 20 trades, gold is not in there”, MKS SA senior vice president Bernard Sin said.
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Nevertheless, the gold market attracts a different crowd, which might have a very different view on those odds – or the impact of a rate hike on the price of gold. Platinum fell as much as 0.9 per cent to $US831.80 an ounce, the lowest since December 2008. “The omens are not positive for gold in the lead-up to the December rate meeting”, Societe Generale analyst Robin Bhar said. Spot gold edged up 0.1 percent to $1,076.16 an ounce by 0034 GMT, following a 0.6 percent gain on Tuesday.
