Gold price near eight-month low as dollar climbs

Yellen reiterates likelihood of rate hike before the end of the year

Gold price near eight-month low as dollar climbs

Gold prices hovered near an eight-month low during early trade in Europe today, as the US dollar gained momentum on increased certainty that the Federal Reserve will raise the central lending rate before the end of 2015. Positive developments on the Greek financial crisis also caused an outflow from precious metals, as investors turned to stocks and other riskier assets.

Gold futures were unchanged at $1,143.90 per troy ounce as of 08:48 BST today. On Wednesday, the yellow metal dipped as low as $1,140.80, the lowest since early November.

"We remain nervous about gold and would not be surprised to see a rather sizable, stop-induced fall to take place if and when we significantly pierce the $1,141 support on the next downswing," INTL FCStone analyst Edward Meir said as quoted by Reuters. "Not only are the charts looking shaky, but we are also seeing the stronger dollar and firmer global equity markets reassert themselves, much as they did back in February and March."

The US dollar enjoyed a sizable boost over the past two sessions, as Fed chair Janet Yellen reassured Congress that the Federal Reserve remains on track to raise the federal funds rate before the end of the year.

There had been growing speculation that recent weakness in US growth would push back the highly-anticipated hike to the first half of 2016.

Following Yellens comments, the dollar added about one percent over the past two sessions, though it has pulled back some 0.2 percent as of 09:02 BST today. Still, the greenback remains near its highest level in three months.

Meanwhile, the ECB agreed to extend its emergency liquidity assistance to Greek banks, while national parliaments across the Eurozone approved the third bailout for the country.

With a Grexit now deemed unlikely, investors exited havens, pushing gold further down.

“It’s hard to give any reasons to buy gold at the moment,” Bill O’Neill, a broker at Logic Advisors, said as quoted by The Wall Street Journal. “There is just nothing to attract investors into precious metals right now.”

As of 09:30 BST, Friday, 17 July, Gold's price is $1,143.50.

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