Sept. 7 (Bloomberg) -- Gold in Asia fell on concern the Federal Reserve may raise interest rates to curb inflation, reducing the metal's appeal as an alternate investment.
Labor costs in the U.S. rose at a 4.9 percent pace in the second quarter after gaining 9 percent in the previous three months, a government report yesterday showed, the biggest back- to-back increase since 2000. Rising interest rates boost the appeal of the dollar and fixed-income investments.
``This is so-called 'second-round effects' where people may increase their wage demand because of inflation concern and that leads into inflation,'' Andrew Harrington, an analyst at Australia and New Zealand Banking Group Ltd., said from Sydney. ``If the Fed raises rates, one would probably see slowing economies, decreasing risks of inflation and a stronger U.S. dollar, all three of which will impact the gold price downwards.''
Gold for immediate delivery fell as much as $1.50, or 0.2 percent, to $632.20 an ounce, and traded at 632.58 at 10:52 a.m. Singapore time. The metal fell 0.7 percent yesterday.
Gold for December delivery fell as much as $2.10, or 0.3 percent, to $639.70 an ounce on the Comex division of the New York Mercantile Exchange. The contract traded at $639.80 at 10:45 a.m. Singapore time.
A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date. |
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