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Gold Sharply Down to $1277 on Interest Rate Concerns

Gold fell to a two-month low in New York as the outlook for higher U.S. interest rates reduced the appeal of the metal as an alternative investment. Platinum headed for the longest run of losses in 27 years in London.

Many U.S. policy makers raised the possibility they may boost rates sooner than anticipated, minutes of the Federal Reserve’s July meeting showed yesterday. Fewer Americans than forecast applied for unemployment benefits last week, signaling the job market is making progress and bolstering the case for higher borrowing costs. The dollar reached a six month high today against a basket of 10 major currencies before trading little changed.

Bullion futures more than doubled from December 2008 to a record $1,923.70 an ounce in September 2011 as the Fed purchased debt and cut rates to an all-time low to spur economic growth. Prices slid 28 percent last year as the global expansion accelerated and policy makers started reducing bond buying. The metal has risen 6.1 percent this year, partly as unrest in Ukraine and the Middle East increased haven demand.

Bloomberg [1]

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