News Column

Gold Soars 3.3% To End Above USD1,300 On Fed Outlook, Iraq

June 19, 2014



WASHINGTON (Alliance News) - Gold futures surged over three % to end at a more than two-month high on Thursday, after the US Federal Reserve yesterday said it expects to hold rates at record low for an extended period of time. The precious metal was also impacted by the ongoing conflict in Iraq, with investors keenly watching the scenario as militants are reported to be relentlessly marching toward Baghdad.

Fed Chair Janet Yellen yesterday reassured markets that the Fed funds rate will hold near zero long after the central bank fully winds down its bond buying program later this year. Stoking inflation remains a key focus of the Fed even as the US economy shows signs of a sustained recovery.

The conflict in Iraq continues unabated with Iraqi Prime Minister Nuri al-Maliki once more urgently calling on the US for help with air strikes against the jihadists. Even as the Iraqi government claims to be in control of the country's biggest oil refinery at Beiji, there have been conflicting reports the ISIS were close to taking full control of the facility.

Gold for August delivery, the most actively traded contract, surged USD41.40 or 3.3% to close at USD1,314.10 an ounce on the Comex division of the New York Mercantile Exchange on Thursday.

Gold for August delivery scaled an intraday high of USD1,317.40 and a low of USD1,276.20 an ounce.

On Thursday, gold futures ended slightly lower with as investors awaited the outcome of the two-day Federal Reserve Policy meet, even as Iraq and Ukraine remained in focus.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 782.62 tons on Thursday from its previous close of 782.88 tons.

The dollar index, which tracks the US unit against six major currencies, traded at 80.29 on Thursday, down from its previous close of 80.41 late Wednesday in North American trade. The dollar scaled a high of 80.41 intraday and a low of 80.15.

The euro traded higher against the dollar at USD1.3609 on Thursday, as compared to its previous close of USD1.3596 late Wednesday in North American trade. The euro scaled a high of USD1.3643 intraday and a low of USD1.3586.

In economic news from the US, a report from the US Labor Department showed initial jobless claims to have dipped to 312,000, a decrease of 6,000 from the previous week's revised level of 318,000. Economists had expected jobless claims to drop to 313,000 from the 317,000 originally reported for the previous week.

The Conference Board's Leading Economic Index rose by a slightly less than expected 0.5% in May, following a 0.3% increase in April.

Meanwhile, manufacturing activity in the Philadelphia region expanded at an unexpectedly faster rate to 17.8 in June, from 15.4 in the previous month. Economists had expected the index to drop to 14.0.

From Europe, British retail sales declined for the first time in four months in May due to a fall in food store sales after Easter spending boosted April sales. Retail sales volume including auto fuel dropped 0.5% in May from April, the Office for National Statistics said Thursday. This was the second fall in last five months and matched economists' expectations. In April, the volume advanced revised 1% on Easter sales.



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Source: Alliance News


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