Gold weakens alongside dollar
Gold took another hit early on Thursday, dropping more than a percentage point to $1,377 an ounce, though it recovered in the afternoon to close at $1,385.80.
The decline for the August futures contract follows some minor gains earlier in the week as investors decide what to make of a stronger US economy.
Reactions to lower unemployment numbers coupled with higher retail sales were behind Thursday's retreat for the precious metal, despite a weakened US dollar.
Although not the case this time, the dollar and gold usually move in opposite directions.
The possibility that the Fed will soon pull back on its policy of QE has investors reluctant to invest in gold. A tighter monetary policy could pull the metal down even further, as it would drive up the value of the dollar.
In general, gold has made gains through the era of quantitative easing, going from just over $800 in December 2008 to $1,909 in August 2011.
It has been an overall poor day for metals, as silver, platinum and copper also saw losses. Concerns over decreased demand in BRIC countries – Brazil, Russia, India and China – has taken its toll on base metals.
In contrast, oil saw some growth on Thursday, hitting $96.69 a barrel on the NYMEX – a 0.8% increase – despite China's announcement that it will curb oil consumption next year.
Creative Commons image by Mauro Parra-Miranda