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.