Gold Remains Low Below $1280 on Fed Rate Speculation

Gold traded near a two-month low on speculation that U.S. interest rates are set to increase as investors awaited remarks from Federal Reserve Chair Janet Yellen at a meeting of central bankers. Silver headed for a sixth week of losses in the longest slump in more than a year.

Gold for immediate delivery traded at $1,278.93 an ounce at 11:43 a.m. in Singapore from $1,276.78 yesterday, when prices reached $1,273.14, the lowest level since June 18, according to Bloomberg generic pricing. The metal declined 2 percent this week as minutes of the Fed’s last meeting signaled that policy makers may hike interest rates earlier than expected, sending the dollar to a six-month high against major peers.

Speculation that the U.S. central bank would cut stimulus as the economy recovered fueled a 28 percent drop in gold prices last year. Some officials were increasingly uncomfortable with the guidance on keeping the benchmark rate low for a considerable time, according to the minutes released Aug. 20. Borrowing costs have been near zero since December 2008 to spur expansion and cut the jobless rate in the largest economy.

Bloomberg

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