Morning: Gold Down to 1-Week on Improved Dollar

U.S. Gold

(Reuters) – On Thursday, gold dropped to 1-week lows as the dollar recovers after the U.S. Federal Reserve’s latest policy view was deemed less dovish than some had ventured on.

The yellow metal had increased ground over the past 2 weeks, hitting a 5-week high on Tuesday in expectation of the Fed’s decision. Yet it dropped when the U.S. central bank did not feel quite as worried about the economy as some had expected, though it continued its $85 billion-a-month stimulus plan unharmed.

Spot gold declined 0.5% to $1,335.36 an oz by 1102 GMT, after dropping to its lowest since October 24 at $1,330.16.

Comex gold futures fell 1% to a 1-week low of $1,330.

The dollar moved near a 2-week high and U.S. Treasury yields remained over 2.5%.

Gold prices have dropped about 20% this year in anticipation of a forthcoming tapering of monetary stimulus by the Fed, but in Washington a budget battle and a series of weak economic data had brought questions around whether it would start that process this year, giving bullion an increase.

ANZ analyst Victor Thianpiriya said “With this event risk now behind us the market will go back into a data-watch mode,” and added “For gold, the intraday moves will continue to be driven by gyrations in the U.S. dollar.”

The market is looking forward for the U.S. weekly jobless claims at 1230 GMT and Chicago PMI numbers for October at 1345 GMT.

Bullion was as well destabilized by weak physical buying in Asia, mainly in China.

Shanghai Gold Exchange prices have moved lower than worldwide prices due to worries of a cash crunch.

China net purchases from Hong Kong, yet, totaled 110.914 tonnes in Sept, in comparison with 110.505 tonnes in Aug. (According to data from the Hong Kong Census and Statistics Department)