Gold below $1,300 on stronger dollar
Singapore, July 16, 2014
Gold steadied after two days of losses on Wednesday but held below $1,300 an ounce, near a four-week low, on a stronger dollar and fears that the Federal Reserve could hike US interest rates sooner than expected.
Fed Chair Janet Yellen said on Tuesday the US central bank could raise rates earlier or faster if hiring and wages take off in an unexpected way, though she signalled that the Fed will keep monetary policy loose until jobs data shows the effects of the financial crisis are "completely gone".
Spot gold edged up slightly to $1,296.35 an ounce by 0304 GMT, after losing 3.3 percent in the last two sessions - the metal's biggest two-day loss since October.
Traders said gold could have further to fall, especially as this week's $40 drop has failed to generate a robust pick-up in physical demand in Asia.
"I don't see any new positions created at this level or any fresh buying in the physical markets," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
"Prices will see some range-trading now and could consolidate at $1,280-90."
Fung said prices in Hong Kong were either on par with the global benchmark, or slightly lower, due to weak demand.
In China, the top consumer of gold, local premiums edged up to $1 an ounce on the Shanghai Gold Exchange from a small discount in the previous session.
The bigger concern in the market is still about US interest rates, with a hike likely to encourage investors to
withdraw money from non-interest-bearing assets such as gold.
Recent economic data from the United States, including that on jobs, has indicated that the economy is on a strong footing.
A strengthening US economy and job market means the Fed should begin raising interest rates "relatively soon," Kansas City Federal Reserve Bank President Esther George said on Tuesday. - Reuters