Spot Gold Slips to $1,245.16

The gold price started the day with a climb up to $1,267.20, a one-week high, but by lunch-time in New York had fallen back to $1,245.16. Gold futures also dropped, with gold for August delivery down 0.92 percent to $1,244.10 an ounce.

Reuters initially reported that traders were buying back the metal to cover short positions, thus pushing up the price of the precious metal. That changed however as the US dollar rose and investors looked to more indications of an end to quantitative easing, the US Federal Reserve policy that buys $85 billion in US Treasuries and mortgage bonds per month to keep interest rates low. 

“The dollar index is strengthening quite a bit, equities are strengthening and you’re seeing interest rates go up. That seems to be the perfect storm against the metal at the moment,” Reuters quoted Phillip Streible, senior commodities broker at R.J. O’Brien in Chicago.

The next indication of the Fed’s position on QE will come Friday with the monthly US employment report.

Gold prices saw a 23 percent loss over the second quarter due in large part to speculation leading up to a decision by the U.S. Federal Reserve regarding whether or not the Fed would end its stimulus plan in light of a recovering U.S. economy.