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Gold down in early Asia as Fed executive says rate hike “close”


on – Gold prices eased slightly in early Asia on Wednesday after remarks from a Federal Reserve board voting member that a widely expected rate hike this year could be “close”.

On the New York Mercantile Exchange, gold for December delivery fell 0.11% to $1,086.30 a troy ounce.

Silver for September delivery fell 0.14% to $14.545 a troy ounce.

Copper for September delivery eased 0.05% to $2.351 a pound.

Atlanta U.S. Federal Reserve Bank President Dennis Lockhart, in an interview with the Wall Street Journal, said the Fed was “close” to being ready to raise short-term rates. Lockhart, a voter this year, is deemed somewhat as a moderate, analysts said, which made his remarks more meaningful.

A rate hike is viewed as bearish for gold, which is unattached to interest rates and struggles to compete with high-yield bearing assets in rising rate environments.

Overnight, inched up amid a slightly lower dollar on Tuesday, as Chinese equities rallied from fresh three-week lows after regulators introduced new stimulus measures aimed at curbing short selling in an effort to reduce volatility in the domestic stock markets.

In China, the soared more than 3% on Tuesday as a flurry of late trading doubled previous gains on the session.

The last-minute, frenzied trading came after Chinese regulators introduced new measures meant to discourage short-sellers from attempting to profit on hourly fluctuations in the equity markets.

Under the new rules introduced by the Shanghai index, as well as the Shenzhen Exchange short sellers will have to wait at least a day to cover their positions and pay back loans. Previously, the traders were allowed to cover their positions on the same day in which a trade was executed.

In recent weeks, Chinese equities markets have suffered a dramatic fall amid a liquidity shortfall and the nation's slowest period of economic growth in more than a decade. By some estimates, Chinese stocks have lost more than $2 trillion in value since mid-June.

China is the world's largest producer of gold and the second-largest consumer of the precious metal behind India. The Asian nation is also the world's largest consumer of , accounting for more than 40% of the world's global consumption.

In the U.S., factory orders for the month of June rose 1.8%, just above analysts' expectations for a 1.7% gain. A surge in civilian aircraft orders by more than 60% on a monthly basis, as well as increases in furniture and automobile orders helped bolster the overall reading. In May, factory orders declined by 1.0% on a month-over-month basis as aircraft orders fell by 32% in comparison with its April level.

Investors await Friday's critical U.S. jobs report for the month of July for further indications on the strength on the labor market and economy. Last week, the Federal Open Market Committee (FOMC) said in its July monetary policy statement that the economy showed signs of growing moderately during the second quarter of the year.

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