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Gold heads for worst week in two months

Source : REUTERS
Last Updated: Fri, Sep 13, 2013 04:08 hrs
An employee arranges gold jewellery in the counter as her arm is reflected in the mirror at a gold shop in Wuhan

Gold edged up on Friday after plunging more than 3 percent in the previous session, but remained on track for its worst week in two months on fears the United States would curb its stimulus soon and as a U.S. strike on Syria looked less likely.

FUNDAMENTALS

Gold had risen 0.55 percent to $1,327.41 an ounce by 0012 GMT. It tumbled to its weakest since August 15 at $1,320.19 an ounce on Thursday, tracking heavy losses in U.S gold futures.

U.S. gold futures trading was momentarily halted at 2:54 a.m. EDT (0654 GMT) on Thursday by CME Group's Stop Logic mechanism to prevent large movements. In the one minute around the 20-second trading pause, gold prices slid $10 with an unusually heavy 4,300 contracts changing hands, Reuters data showed.

U.S. gold was at $1,327.50 an ounce, down $3.10.

The United States and Russia began high-stakes talks on Thursday on Moscow's plan for Syria to surrender its chemical weapons as Damascus formally applied to join a global poison gas ban, but Secretary of State John Kerry underscored that U.S. military force may still be necessary if diplomacy fails.

Consensus is building among analysts that the Federal Reserve's policy meeting next week could result in the central bank paring back its $85 billion monthly bond purchases. The Federal Open Market Committee is set to release a policy statement at the end of its two-day meeting next Wednesday.

HSBC Global Research raised its 2013 gold price forecast and said physical demand is becoming a major driver for the metal. It lifted its gold price outlook for this year to $1,446 per ounce from $1,396, and kept its 2014 forecast unchanged at $1,435 an ounce.

MARKET NEWS

The yen clung to broad overnight gains in Asia on Friday as investors unwound bearish positions particularly against the Australian dollar, which suffered a major setback in the wake of disappointing jobs data at home.

Global oil prices climbed for a second straight day on Thursday as investors monitored diplomatic efforts to eliminate Syria's chemical weapons and Libya declared force majeure on another three ports.


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