Gold Prices Waver Amid Uncertainty On Interest Rates

By Ira Iosebashvili 

        Gold prices shuffled between gains and losses Friday, amid uncertainty over whether the Federal Reserve will raise interest rates next month.
        Gold for December delivery, the most actively traded contract, was recently down 0.2% to $1,112.90 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices hit $1,120.40 a troy ounce earlier in the session.
        The Wall Street Journal Dollar Index, which gauges the dollar's performance against a basket of 16 currencies, reversed earlier losses and was recently up 0.2% at 88.63. The volatility in the U.S. currency comes as investors weigh the chances of an interest-rate increase from the Fed in September, a move that is expected to boost the dollar and hurt gold.
        Higher interest rates are viewed as bad news for gold, which pays its holders nothing and struggles to compete with yield-bearing investments when borrowing costs rise. A stronger dollar, meanwhile, makes gold less attractive to foreign investors, as it is priced in the U.S. currency and becomes less affordable when the dollar rises.
        Some market participants warned the precious metal may have more downside, after falling 7% from its June highs.
        "Better U.S. data from here should help keep weight on the gold price," said Mike Dragosits, a strategist at TD Securities, in a note to investors.
        Investors will be keeping a close eye on minutes from the Fed's last meeting, due out next week, for hints on whether the central bank believes the U.S. recovery is strong enough to withstand a rate increase, Mr. Dragosits said.
        Gold had rallied to a three-week high earlier this week, as some investors bet the Fed was more likely to stand pat on rates after a currency devaluation by China roiled currency and equity markets. The central bank said in July it was likely to raise rates for the first time in nearly a decade this year, if the U.S. recovery continued apace.
        Write to Ira Iosebashvili at ira.iosebashvili@wsj.com
        (END) Dow Jones Newswires

        August 14, 2015 11:35 ET (15:35 GMT)