Gold slides 1.5% as Fed comments lift dollar
Analyst says greenback's strength may force precious metal lower
London : Gold prices fell 1.5 per cent in Europe yesterday, pressured by the dollar's surge to three-month highs after the Federal Reserve voiced optimism about the US economy.
Spot gold was bid at $1,119.40 (Dh4,110.44) an ounce at 1201 GMT, against $1,137.80 late in New York on Wednesday. In that session it climbed as high as $1,141.50.
"As the markets get further confirmation that the US economy is gathering strength, the dollar's strength may force gold to slide lower," Pradeep Unni, a senior analyst at Richcomm Global Services, said.
US gold futures for February delivery on the Comex division of the New York Mercantile Exchange fell $15.30 to $1,120.80 an ounce.
The dollar hit three-month highs yesterday as investors wound up short positions for the year, with the Fed's statement on the economy supporting the unit's recent rebound.
The Fed voiced growing optimism on Wednesday over the US economy as job losses slow, but said it would keep interest rates low for "an extended period.
In a post-meeting statement, the Fed highlighted improvement in the battered housing sector and noted last month's fall in the unemployment rate.
Strength in the US unit reduces gold's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
