Gold rises slightly after Yellen comment, but outlook dim
August 22, 2014 9:43 PM
By Frank Tang and Clara Denina
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NEW YORK/LONDON (Reuters) - Gold prices edged up on Friday as U.S. equities slipped, but gains were limited after Federal Reserve Chair Janet Yellen said U.S. labor markets remain hampered by the effects of the Great Recession.
For the week, gold lost about 2 percent, its biggest weekly loss in five, as speculation over an early interest rate hike following the latest Fed minutes earlier this week weighed heavily on the yellow metal.
In a speech at a central banking conference in Jackson Hole, Wyoming, Yellen said the U.S. central bank should move cautiously in determining when interest rates should rise, as economic disruption of the last five years has left millions of workers sidelined, discouraged, or stuck in part-time jobs.
Gold prices continued to hover just above a two-month low reached on Thursday. Bullion has dropped about 3 percent in the past five sessions, underperforming U.S. Treasury bonds, which are considered the preferred safe-haven investment, traders said.
"I see no reasons to own gold, which is likely to trend lower with rallies being sold. The Treasury yields at under 3 percent and crude oil prices showing signs of a recession are significant headwinds for precious metals," said Jonathan Jossen, COMEX gold options floor trader in New York.
Spot gold was up 0.3 percent at $1,280.29 an ounce by 3:22 p.m. EDT (1922 GMT), not far from a two-month low of $1,273.06 hit on Thursday. The metal is down 1.9 percent for the week, the biggest drop since the week ended July 18.
U.S. COMEX gold futures for December delivery settled up $4.80 at $1,280.20 an ounce.
U.S. crude oil futures fell on Friday for a fifth straight week of declines on worries about plentiful supplies. Oil prices have also dropped more than 4 percent in the last 10 sessions, while the S&P equities index fell after investors got few clues about the course of interest rates from Yellen.
Physical demand for gold in major consumers China and India remained weak. Analysts, however, expected buying from India to increase heading into the festival and wedding season, when it is traditionally considered auspicious to buy the metal.
Among other precious metals, silver was down 0.1 percent at $19.40 an ounce. Platinum rose 0.3 percent to $1,416.25 an ounce, snapping a nine-day losing streak, its longest since July 2008. Spot palladium climbed 1.3 percent to $885.25 an ounce.
(Additional reporting by A. Ananthalakshmi in Singapore; Editing by David Evans, Nick Zieminski and Tom Brown)