Gold took a beating as weekly jobless figures in the US hit a 15-year low today.
The jobless count, which stood at 260,000 was 25,000 less than had been expected and more than 30,000 less than the previous week.
One trader said “there has been some positive data in the US and what that means is the Fed is more likely to raise interests sooner.”
Previously, weak US GDP data had led economists to suggest the Fed will defer a June interest rate hike, with a more likely target the end of the year.
While noting growth had slowed in the first quarter, the Fed said it expected a moderate pace to be maintained over the rest of the year.
“The committee continues to expect that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the committee judges consistent with its dual mandate,” it said.
It was in line with Fed chair Janet Yellen‘s previous comments that a rate rise was on the table now at all meetings and that any decision on interest rates would be data driven.
Gold watchers commented that although gold rallied this week it should have done better.
Commerzbank said: “The gold price hardly profited at all from the weak US economic data and the resulting significant depreciation of the US dollar yesterday.”
“The significantly lower equity markets lent virtually no support to gold either.”
The dollar was mixed today, with gains against many currencies but losses versus the euro where hopes of a sustained recovery are growing.
Gold tumbled US$27 to US$1,177 an hour into US trading. Silver eased 1.2% to US$16.50 while platinum shed 1.4% to US$1,138.
Major Movers
Randgold Resources down 126p to 4,969p
Anglo American down 50p to 1,089p
Fresnillo down 20p to 719p.