Gold Extends Drop as Fed Says Job Gains May Hasten Rate Rise

Aug 20, 2014 2:29 pm ET

Aug. 20 (Bloomberg) -- Gold fell to a two-week low after minutes of the Federal Reserve’s July meeting raised the possibility that interest-rate increases may happen sooner than anticipated.

“Many participants noted that if convergence toward the committee’s objectives occurred more quickly than expected, it might become appropriate to begin removing monetary policy accommodation sooner than they currently anticipated,” the minutes of the last Federal Open Market Committee meeting showed today.

Gold futures fell 3 percent last month as the dollar gained and amid concern that the Fed will raise interest rates as the economy gains traction. At the July meeting, the Fed cut bond purchases by $10 billion for a sixth time since November.

“The hawkish voices within the Fed have become louder,” Jerry Webman, chief economist at OppenheimerFunds Inc. in New York, which has about $249 billion in assets under management, said in a telephone interview. “While the economic numbers are not very strong, they are definitely showing some strength.”

Gold for immediate delivery fell 0.5 percent to $1,288.99 an ounce at 2:24 p.m. New York time after dropping to 1,288.01, the lowest since Aug. 6.

On the Comex in New York, gold futures for December delivery settled 0.1 percent lower at $1,295.20.