Gold Falls to Four Year Low 1

By
Monday, October 6th, 2014
liked this article
Embed
Siemens – 300×250 (Expires October 31st 2017)
advertisement
gold
FavoriteLoadingsave article

Gold prices fell to a four-year low on Friday after stronger-than-expected US employment data intensified investors’ concerns about how soon the Federal Reserve would raise interest rates.

The price of the precious metal has been sliding for months, as investors keep a close eye on the Fed. Higher interest rates would likely damp demand for gold, which doesn’t pay any interest. While the central bank isn’t expected to make its move until next year, investors trying to get ahead of the Fed could push gold to end 2014 lower for a second year in a row.

The US economy added 248,000 jobs in September, the Labor Department said, beating economists’ forecasts of an increase of 215,000. It was the fastest pace of job growth since June.

“Jobs data like this strengthens the camp that says the Fed will be raising rates sooner rather than later, and that’s very bearish for gold,” said Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago.

The most actively traded gold contract, for December delivery, fell $US22.20, or 1.8 per cent, to $US1,192.90 a troy ounce on the Comex division of the New York Mercantile Exchange. This was the lowest settlement price since August 3, 2010, erasing futures’ gains for the year.

Fed officials have previously said that a stronger labour market would pave the way for tightening monetary policy once the central bank’s stimulus efforts are wound down.

Moreover, robust US growth is likely to sap investor demand for protective assets like gold. A brighter outlook tends to spur demand for investments like stocks and bonds that benefit from an expanding economy.

“You have a US economy that for the foreseeable future can shake off the rest of the world’s woes,” said Frank McGhee, a senior precious-metals dealer with Integrated Brokerage Services LLC in Chicago.

The US unemployment rate, obtained from a separate survey, fell to 5.9 per cent last month from 6.1 per cent in August, hitting the lowest level since July 2008.

Embed
FavoriteLoadingsave article

Comments

 characters available
*Please refer to our comment policy before submitting
Discussions
1
  1. Mark Bisselle

    Yes it has fallen to below $1200 … I was waiting for this to happen. Gold is still the safest, most secure investment internationally. Own Physical gold in some way. Futures and Junior Stocks gold ETF's etc. entirely defeat golds purpose.