Gold prices sold off moderately in the aftermath of FOMC minutes
Bullion metals ended lower at Comex on Wednesday, 20 August 2014. Gold prices sold off moderately in the aftermath of FOMC minutes that revealed Fed officials believe the U.S. labor situation is moving closer to normal, and with other clues hinting the Fed could raise interest rates sooner than many expected. Gold prices retreated below $1,300 on Wednesday as traders prepared for the release of minutes from the last Federal Reserve policy meeting while keeping one eye on the end of the week, when Janet Yellen steps up in Jackson Hole. The stronger dollar is also a bearish underlying factor for the raw commodity sector, including the precious metals.
Gold for December delivery shed $1.50 to settle at $1,295.20 an ounce.
September silver slipped 22 cents to $19.41 an ounce.
Traders will be poring over the Federal Open Market Committee minutes later in the day, looking for clues as to when the Fed will start hiking interest rates.
The FOMC minutes report was the economic highlight of the day for the market place. The Fed officials' wording that the U.S. labor situation continues to improve fell into the camp of monetary policy hawks, as it hinted the U.S. central bank could move to raise interest rates sooner than many expected. Now, focus turns to later this week and the annual Kansas City Federal Reserve meeting in Jackson Hole, Wyoming, that begins on Thursday.
In overnight news, the German government auctioned its two-year note (the Schatz) at a zero percent yield, amid strong investor demand. This underscores the keener risk aversion still in the market place, especially in the European Union, where slow to negative economic growth and very low inflation are serious concerns. It was also reported that German producer prices fell 0.1% on the month and were down 0.8% on the year in July.
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A feature in the market place recently has been a stronger U.S. dollar against the other major currencies of the world. The U.S. dollar index, which is a basket of six major currencies weighted against the greenback, hit an 11-month high overnight. There has been increased safe-haven demand for the dollar amid the recent heightened geopolitical tensions.
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