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Gold deepens decline as global interest- rate differential in focus
MARKETWATCH 9:01 AM ET 1/19/2017
Symbol Last Price Change
GLD 113.99 -0.88 (-0.77%)
SLV 15.8899 -0.3001 (-1.85%)
GDX 22.5799down -0.4301 (-1.87%)
QUOTES AS OF 09:59:45 AM ET 01/19/2017
Fed's Yellen strikes a more-hawkish stance in market's view; ECB stands pat

Gold fell for a second straight session Thursday as the dollar gained in the wake inaction on interest rates, as expected, from the European Central Bank and relatively hawkish comments from Federal Reserve head Janet Yellen.

Gold for February delivery fell $10.60, or 0.9%, to $1,201.60 an ounce, with the yellow metal holding lower after the ECB released its policy statement. Gold retreated on Wednesday as well, but the contract had climbed 1.4% Tuesday to settle at its highest level since Nov. 17, according to FactSet data.

Meanwhile, March silver unraveled by 40 cents, or 2.3%, to $16.87 an ounce.

The ICE U.S. Dollar Index , meanwhile, gained 0.4%. Gold and the dollar typically inversely because a stronger greenback can erode demand by making assets pegged to the buck, including metals, more expensive to buyers using other monetary units.

As for European policy, the inaction comes as the ECB last month decided to extend its bond-buying program through the end of 2017. In postmeeting comments, the ECB's Mario Draghi said he's ready to expand quantitative easing to boost the economy if needed.

Read:ECB live blog: Mario Draghi expected to maintain dovish course (http://blogs.marketwatch.com/thetell/2017/01/19/ ecb-live-blog-mario-draghi-expected-to-maintain-dovish-course/)

The U.S. dollar began to climb on Wednesday after Yellen said she expects Fed-controlled interest rates to rise "a few times a year" through 2019 (http://www.marketwatch.com/story/feds-yellen-says-she-expects-rates-to-rise-a-few-times-a- year-until-end-of-2019-2017-01-18). She also said the central bank was nearing its goals for inflation and employment and that it "makes sense" to reduce the central bank's level of monetary support. Higher interest rates tend to dull demand for gold which doesn't bear a yield.

The Fed's stance contrasts with central banks elsewhere, including the ECB.

Currency and moves in metals have been relatively limited as investors show caution ahead of President-elect Donald Trump's inauguration scheduled for Friday, especially after Trump recently suggested he favored a weaker dollar.

Read:Trump is waving adios to the longstanding 'strong dollar policy' (http://www.marketwatch.com/story/trump-is- waving-adios-to-the-longstanding-strong-dollar-policy-2017-01-17)

"One must be fully cognizant that the uncertainty surrounding this new administration will continue at least until inauguration. And even though that is [not far] away, it will be the first seven days, [and then] the first 30 days of a new Trump administration before we are able to see what transformations and policies will be implemented, as well as a much clearer timeline as to how these new policies and programs will unfold," said Gary Wagner of Thegoldforecast.com.

The dollar had rallied and gold wavered in the immediate wake of Trump's election win on speculation he would usher in potentially inflationary pro-growth policies. The dollar rally, to a 14-year high at one point, then faded and gold rebounded as the market grew weary waiting on details.

Read:Gold prices could soar if Donald Trump says any one of these five things (http://www.marketwatch.com/story/gold- prices-could-soar-if-donald-trump-says-any-one-of-these-five-things-2017-01-18)

In ETF trading, the SPDR Gold Trust(GLD) fell 0.2%, the iShares Silver Trust(SLV) shed 0.7% and the VanEck Vectors Gold Miners ETF(GDX) lost 0.7%.

-Rachel Koning Beals; 415-439-6400; [e-mail]


(END) Dow Jones Newswires
01-19-170901ET
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