Gold dives close to six-year low

LONDON: Gold sank Wednesday close to the lowest level in nearly six years, as the dollar rallied on prospects for a December interest rate hike from the US Federal Reserve.

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The price of gold slumped in Asian trading hours to $1,063.55 per ounce, forging the lowest level since February 2010.

“Gold slumped to fresh lows … as expectations mounted around the Fed taking action to increase interest rates in the December meeting,” said FXTM analyst Lukman Otunuga.

“The direction of gold continues to be dictated by US interest rate expectations and dollar appreciation has attributed to the factors repelling investors from this metal.”

Prospects are mounting that the Fed could lift US interest rates next month for the first time in almost a decade.

Signs of a pick-up in US inflation, alongside recent bright jobs data, has reinforced those expectations.

The strong dollar makes raw materials priced in the US unit more expensive for holders of rival currencies. That tends to weigh on demand and price levels.

At the same time, the euro has weakened sharply against the greenback in recent days, under pressure from expectations of more European Central Bank stimulus aimed at supporting the eurozone economy, according to analysts.

The shared euro currency had struck a seven-month low at $1.0631 on Tuesday.

Traders will meanwhile gain fresh insight into the US central bank’s thinking later on Wednesday with the publication of minutes from its October monetary policy meeting.

Commodity markets in general are also being hit by concerns over China’s weakening economy.

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Gold dives close to six-year low

by AFP