Gold prices were seen falling on Thursday, dropping to its lowest level in three weeks, as investors worries on whether the Federal Reserve (Fed) will begin to scale-back on its bond-buying program earlier than expected.
Gold futures edged 1.14% lower to $1,347.60 an ounce at the time of writing, while silver dropped 1.50% to $22.835 an ounce. The US dollar index declined 0.09% to 81.4430.
On Wednesday, holdings in the world’s largest gold-backed exchange-traded fund SPDR Gold Trust remained unchanged at 917.13 tonnes..
Gold Prices – Fed Scale-back worries
The fall in gold price, which dropped to 19% this year, was due to the continuous worries over whether the Federal Reserve (fed) would begin to taper its bond-buying program earlier than expected if the world’s largest economy shows an improvement. Analysts are expecting the Fed to announce when it will begin to scale-back on its stimulus program in its next meeting on September 17-18.
“The September FOMC meeting, where our economists expect a tapering could prove the catalyst to push gold prices lower although the looming debt ceiling may initially limit the downside to gold prices until it is raised by the end of October,” analysts at Goldman Sachs wrote in a research report.
The US weekly unemployment figures are expected to increase by 330,000 in the week ending September 7, up from previous record of 323,000 last week.
The Gold market has an influence with what happens on the US labour market, which is also linked to the central bank’s policy.
Syria Tension
Investors are still focused on the situation in Syria after the US President Barack Obama asked the Congress to push back the vote over the US military intervention in Syria, after the country agreed to accept Russia’s proposal to give up its chemical weapons under international control.
The US Secretary of State Job Kerry is expected to meet the Russian Foreign Minister Sergei Lavrov later in the day to discuss plans for Syria.
Gold Prices – Global demand
Bullion global demand is expected to fall to 2,237 tonnes in the second half of the year, compared to previous year’s record of 2,309 tonnes, according to Thomson Reuters GFMS.
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