News Column

Gold Ends Higher After Yellen's Speech At Jackson Hole; Sheds 2% For Week

August 22, 2014

WASHINGTON (Alliance News) - Gold futures snapped a five-day losing streak to end higher on Friday, after Fed Chair Janet Yellen's address to fellow central bankers showed little clarity as to when a rate hike could be expected.

With little or no significant economic release for the day, gold prices benefited from some bargain hunting after the recent string of losses while tracking mostly declining European and US equity markets.

Gold futures shed about 2% for the week.

Federal Reserve Chair Janet Yellen on Friday warned that rate hikes could come sooner than expected if the US economic recovery is sustained. She was speaking at the Fed's annual Jackson Hole symposium, addressing fellow central bankers.

However, Yellen also said the Fed's internal labor market indicators suggest the recent decline in the unemployment rate overstates the improvement in overall labor market conditions.

Fed members are engaged in a tricky debate over when to raise rates from near zero for the first time in six years. With the Fed charged with promoting maximum employment, the debate hinges on a thorough analysis of slack in the labor market, the subject of today's speech by Yellen.

The minutes of the Federal Reserve's recent policy meeting show fierce debate over interest rates with some Fed members favoring a hike sooner than earlier forecast.

Gold for December delivery, the most actively traded contract, gained USD4.80 or 0.4% to close at USD1,280.20 an ounce on the Comex division of the New York Mercantile Exchange on Friday.

Gold for December delivery scaled an intraday high of USD1,283.90 and a low of USD1,274.60 an ounce.

On Wednesday, gold futures extended losses for a fifth straight session, amid speculation the US Federal Reserve might begin monetary tightening sooner than expected on the back of a slew of upbeat economic data.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 800.08 tons on Friday, from its previous close of 799.19 tons.

The dollar index, which tracks the US unit against six major currencies, traded at 82.34 on Friday, up from its previous close of 82.16 late Wednesday in North American trade. The dollar scaled a high of 82.46 intraday and a low of 82.06.

The euro trended lower against the dollar at USD1.3239 on Friday, as compared to its previous close of USD1.3281 late Thursday in North American trade. The euro scaled a high of USD1.3297 intraday and a low of USD1.3222.

Speaking at the Jackson Hole Symposium, Federal Reserve Chair Janet Yellen said the central bank could go either way with regard to interest rates. Yellen said an increase in rates could come sooner than expected if the progress on inflation and the labor market occurred more rapidly than anticipated. At the same time, future calls on rates could be more accommodative in the event of a disappointing economic performance.

From Europe, UK's house price sentiment index rose in August at the slowest pace in five months, results of a survey by Knight Frank and Markit Economics showed Friday. The house price sentiment index, an indicator of house price trends, dropped to 61.8 in August from 62.4 in July. However, a reading above 50 indicates that prices are rising. It was the seventeenth consecutive month of increase.

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Source: Alliance News

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