Gold prices dropped during Thursday morning sessions following comments from the FOMC yesterday, which diminished the yellow metals status as a safe haven.
The spot gold price was last at a session low of $1,203.50 per ounce a 0.7 percent or $8.9 loss on the previous day’s close.
The Fed, as expected, will conclude its asset purchase programme (QE3) this month. The debate now turns to when will be the right time to raise interest rates, which have been near zero since December 2008. Before yesterday’s release, the market consensus was that the first increase will happen sometime in the middle of 2015.
But the tone of FOMC statement was quite optimistic. The committee said that there has been a “substantial improvement” in the outlook for the labor market since the inception of QE3, while the underutilization of labor resources is “gradually diminishing”.
The dollar gained against the euro on the news, with the euro last at $1.2588, having been above $1.27 prior to the comments.
The data agenda is busy today, from the EU there is Spanish flash CPI, Spanish flash GDP and German unemployment claims. From the US, advanced GDP, unemployment claims, advanced GDP price index, while Fed chair Janet Yellen is also set to speak.
“We think the next shoe to drop as far as gold is concerned will come on Thursday when US GDP numbers for Q3 will be released,” said INTL FCSTone analyst Edward Meir. “If the number comes in higher than three percent, as we suspect it will, we would