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Gold Slips to Trade Near 3-month Low on Rate Hike Fears

Gold Slips to Trade Near 3-month Low on Rate Hike Fears

Gold slipped on Wednesday to trade near its lowest in three months as speculation over an early US interest rate hike strengthened the dollar and dulled bullion's appeal.

Spot gold slipped $1 to $1,254.90 an ounce by 0039 GMT. It fell to $1,247.15 on Tuesday - its lowest since June 6, before paring losses to close up 0.04 per cent.

The dollar hit a 14-month high on Tuesday as investors seemed to reprice the risk of an earlier US interest rate hike after interpreting a Federal Reserve study as suggesting they were underestimating such a move.

The Fed research published earlier this week ramped up expectations that central bankers could signal an earlier-than-expected hike in rates at their policy-setting meeting next week on September 16-17.

US job openings held near a 13-year high in July while hiring picked up, according to a report from the US Department of Labor.

Investors fear strong economic data could prompt the Fed to raise rates sooner than expected. Higher rates would dull the appeal of non-interest yielding assets such as bullion.

Easing geopolitical tensions over the Ukraine crisis also curbed some safe-haven appetite for gold. A ceasefire between Ukraine and pro-Russian rebels was agreed on Friday, part of a peace plan meant to end a five-month conflict that has killed more than 3,000 people and caused the sharpest confrontation between Russia and the West since the Cold War.

But caution persisted as the military said five Ukrainian servicemen have been killed in the past four days, underscoring strains in the ceasefire.

Copyright: Thomson Reuters 2014