Gold falls 1.5pc after Yellen nomination news


NEW YORK: Gold fell 1.5 percent to $1,300 an ounce on Wednesday, as the dollar rose while investors digested news that Federal Reserve Vice Chair Janet Yellen will be nominated as the next chief of the US central bank.

Trading volume, which has been light this week, heated up briefly for about 10 minutes in US morning trade. Prices remained rangebound, with buyers on the sidelines due to a lack of US data and anxiety over how the stand-off in Washington will play out, as a US government shutdown continues.

Analysts said it looked like investors were losing confidence in gold as a safe haven, noting that the precious metal did not rise as much as some had thought it would as the deadline neared for a potential US debt default.

“This lack of response to the US shutdown may mask an underlying negative investor sentiment,” said James Steel, chief precious metals analyst at HSBC.

“At the very least gold’s safe-haven bid is lacking. Some of the explanation for this may be that currency markets have not moved sharply,” Steel said.

Spot gold was down 1.5 percent at $1,299.16 an ounce by 12:12 p.m. EDT (1612 GMT).

US gold futures for December delivery slipped $25.10 an ounce to $1,299.50, with trading volume on track to finish in line with the 30-day average, preliminary Reuters data showed.

Gold futures prices dropped suddenly between 10:10 and 10:20 a.m. EDT (1230-1240 GMT) to an intraday low of $1,294 an ounce, with volume of some 15,000 lots changing hands in 10 minutes, about a fifth of the market’s trading activity at the time.

Options dealers reversed their earlier trades by selling put options and buying calls, a move seen as bullish for gold prices, said Comex gold options floor trader Jonathan Jossen.

The dollar rose from an eight-month low against major currencies as news that Yellen will be nominated as the next Fed chief.

Yellen is expected to continue the Fed’s asset-buying program, which has pressured the dollar. Still, the news brought some relief to investors who have been on edge because of the budget deadlock in Washington.


Republicans and Democrats in Congress saw signs of hope for a break in their fiscal impasse, as members of both parties floated the possibility of a short-term increase in the debt limit to allow time for broader negotiations.

Congress faces an Oct. 17 deadline to increase the $16.7 trillion borrowing limit to avert the risk of a default on US debt.

Traders are awaiting the release at around 2 p.m. Courtesy: Reuters

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