Gold Ends Lower As Dollar Strengthens, Stocks Rebound

(RTTNews) - Gold futures dropped sharply for a fifth straight session to end at a one-month low Wednesday, as investors turned to the riskier equity assets as global stocks rebounded and the dollar trended higher against some major currencies.

Gold prices ended at its lowest since August 7.

Both the European and Asian markets ended firmly in the green. China's Shanghai Composite Index posted impressive gains of over 2 percent in the last couple of days. The continued strength among Chinese stocks is partly due to optimism that the government will take additional steps to support the economy.

U.S. stocks trimmed gains with buying interest waning not long after the start of trading, as traders seemed reluctant to pick up stocks in the absence of any major U.S. economic data.

With little or no economic data out of the U.S. until Thursday, investors are focused on the Federal Reserve policy meeting next week. There is unlikely to be much movement in gold ahead of the Federal Reserve's crucial policy meeting September 16-17. Analysts are divided on whether the Fed will raise interest rates at the meeting. A rate hike could dent gold prices and strengthen the U.S. dollar.

Gold for December delivery, the most actively traded contract, dropped $19.00 or 1.7 percent, to settle at $1,102.00 an ounce, on the Comex division of the New York Mercantile Exchange on Wednesday.

Gold for December delivery scaled an intraday high of $1,124.70 and a low of $1,100.10 an ounce.

On Friday, gold prices for December delivery dropped $0.40, to settle at $1,121.00 an ounce, ahead of the two-day Federal Open Market Committee meet next week, even as the dollar trended lower against some major currencies.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 682.35 tons on Wednesday from its previous close.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 96.23 on Wednesday, up from its previous close of 95.86 in late North American trade on Tuesday. The dollar scaled a high of 96.41 intraday and a low of 95.86.

The euro trended lower against the dollar at $1.1166 on Wednesday, as compared to its previous close of $1.1204 in North American trade late Tuesday. The euro scaled a high of $1.1213 intraday and a low of $1.1133.

On the economic front, U.K. industrial production dropped unexpectedly and the visible trade gap widened to the highest level in a year in July largely due to a strong pound, suggesting a weak start to the third quarter.

Industrial output dropped 0.4 percent on a monthly basis in July, having had an equivalent fall in the prior month, the Office for National Statistics said Wednesday. Economists had forecast 0.1 percent growth for July. This was the second consecutive fall in production.

UK visible trade deficit widened for a second straight month in July to its biggest level in a year, exceeding economists' expectations, figures from the Office for National Statistics showed Wednesday. The deficit in the trade in goods rose to GBP 11.082 billion from GBP 8.507 billion in June. Economists had forecast a GBP 9.5 billion shortfall.

British shop prices declined for the twenty-eighth consecutive month in August, defying expectations for a slower drop, the British Retail Consortium said on Wednesday. Shop prices fell 1.4 percent year-over-year in August, the same rate of decrease as in the previous month. Economists had forecast only a 0.2 percent drop for the month.