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Gold touches two-week low
[NEW YORK] Gold dropped to the lowest in more than two weeks after the Federal Reserve signaled that an increase in interest rates is still on the table for this year.
The central bank, in a statement on Wednesday following a two-day meeting, dropped a reference to global risks and said economic growth remains "moderate."
Odds that the Fed will move on rates in December jumped to 50 per cent from 34 percent a week ago, Fed-fund futures data show. Higher rates curb the appeal of gold because the metal doesn't pay interest or give returns like assets such as bonds or equities.
Bullion had climbed in two of the previous three weeks on speculation that a weakening global expansion would spur the Fed to hold off on tightening monetary policy. A government report on Thursday showed US jobless claims held near a four-decade low, adding to signs that the economy may be strong enough to withstand higher rates.
"Gold dropped following the Fed announcement yesterday," Frank Cholly, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. "If there were any surprises at all, it's that you can interpret the language as a little hawkish, at least leaving open the possibility of a rate hike in December."
Gold for immediate delivery dropped 0.8 per cent to US$1,146.65 an ounce at 2:34 pm New York time, after touching US$1,146.01, the lowest since Oct. 9.
Holdings in exchange-traded products backed by gold fell for the first time in three days, declining 1 metric ton to 1,542.1 tons on Wednesday, data compiled by Bloomberg show.
Gold futures for December delivery slid 2.4 per cent to close at US$1,147.30 on the Comex in New York. Silver futures for December delivery fell 4.6 per cent to US$15.55 an ounce. Wednesday's Fed statement was released after metals settled on the exchange.
On the New York Mercantile Exchange, platinum futures for January delivery dropped 1.9 per cent to US$993.30 an ounce, while palladium for December delivery declined 2.2 per cent to US$670.80 an ounce.