Gold Slides Below $1300 as Fed Rate Hike Plans Erode Bullion's Value


At 0722 GMT on Thursday, gold was trading $1303.20.

The kiwi fell to 61.24 euro cents from 61.61 cents amid expectations Chancellor Angela Merkel's alliance will win this weekend's elections, giving her a fourth term in office.

The most active U.S. gold futures for December delivery settled up $5.80, or 0.44 percent, at $1,316.40 per ounce. Don't have an account?

"The size of gold's drop shows that North Korea had little to do with gold's late-summer surge", Adrian Ash, head of research at BullionVault, told MarketWatch. Still, the greenback's gains against its Japanese counterpart were seen to be relatively limited. The pan-European FTSEurofirst 300 index was up 0.3 percent.

Down under, the ASX 200 fell 1.21 percent to 5,639 at midday.

The fixing of the yuan is also back in focus as investors try to gauge where the People's Bank of China wants the currency, following a set of weaker-than-expected fixings last week.

Aside from interest rates, the Fed will address the reduction of its $4.5-trillion balance sheet, which economists expect to begin as soon as October.

Asian stocks ended mostly lower on Thursday and the dollar strengthened after the US Federal Reserve struck a somewhat hawkish tone by signalling another rate hike this year. So far markets appear to be calm as the Fed signaled that it will be a gradual process.

"Gold prices also came under some selling pressure, with investors dismissing geopolitical risks and instead focusing on the possibility of rate hikes from central banks", ANZ analyst Daniel Hynes said in a note.

Today, markets are turning to Japan for potential changes in its monetary policy.

"This sentiment was due to persistently low inflation and the negative impact of Hurricanes Harvey and Irma on economic growth". Market expectation is that the BOJ will leave the rates unchanged given the low inflation rate.

WALL STREET: The S&P 500 index rose 3.64 points, or 0.1 percent, to 2,503.87. The euro was at $1.1998-2002, up from $1.1993-1993, and at ¥133.66-66, down from ¥133.97-98. A rising interest-rate climate also tends to dull the appeal of nonyielding bullion. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication. Santos and Oil Search are advancing almost 2 percent each, while Woodside Petroleum is edging up less than 0.1 percent.

The New Zealand dollar hit its strongest in more than a month at $0.7374 after a poll showed the ruling National Party regaining a wide lead over the opposition before Saturday's election.

Brent Crude was flat at $55.37 per barrel. Sterling had been creeping higher before the Fed released a statement about its latest two-day policy meeting, then reversed course and fell.