SINGAPORE: Gold extended losses to a fifth session on Thursday, dropping to a two-week low after the US dollar strengthened on indications from the US Federal Reserve that it could raise interest rates sooner than expected.
A surprisingly strong recovery in the US job market could lead the Fed to raise interest rates earlier than it had been anticipating, minutes from the Fed's July meeting showed, although most officials wanted further evidence before changing their view.
Spot gold hit a two-week low of $1,284.80 an ounce and traded down 0.5 percent on the day at $1,285.81 at 0324 GMT. US gold was down about $8 at $1,287.
"Gold is under pressure because of the stronger dollar," said one precious metals trader. "More data today should test gold's support and it is very likely that gold will go to $1,280 and below."
Gold failed to move up despite a dip in Asian shares, which came under pressure as a disappointing Chinese manufacturing survey stoked concern about the regional giant.
The US dollar traded at 11-month highs against a basket of major currencies because of the slightly hawkish tone in the US central bank's minutes.
Thursday's data on US weekly jobless claims and eurozone
and US manufacturing data should be the next triggers for gold, and markets are also waiting for Fed chair Janet Yellen's comments at the Jackson Hole central bankers' gathering on Friday.
Investors fear that strong data could prompt the Fed to
increase rates soon. Higher interest rates would dull the appeal of non-interest-bearing assets such as gold.
Meanwhile, SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.9 tonne to 800.09 tonnes on Wednesday, the third straight daily increase.
Continued violence in Ukraine and the Middle East may be prompting investors to seek safety in gold. Those conflicts have helped push bullion up around 7 percent this year.
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