Gold Holds Drop Below $1,200 as Dollar Strengthens, SPDR Shrinks
Gold held losses below $1,200 an ounce as a gauge of the dollar traded near the highest level in five years on expectations that U.S. interest rates will rise and assets in the largest exchange-traded product shrank.
Bullion for immediate delivery rose and fell at least 0.3 percent, and traded at $1,181.55 an ounce at 11:44 a.m. in Singapore from $1,182.68 yesterday, Bloomberg generic pricing showed. The metal dropped 1.2 percent yesterday as the rally to a two-week high of $1,204.68 on Nov. 18 damped demand.
The Bloomberg Dollar Spot Index headed for the highest close since March 2009 as the yen weakened after minutes from the Federal Reserve‘s latest meeting showed the U.S. moving toward higher interest rates while Japan pursues further stimulus. Holdings in the SPDR Gold Trust yesterday dropped toward the lowest level since September 2008 after expanding on Nov. 17 for the first time in two weeks.
“We’re seeing significant differentiation between the Fed’s policy and those of other central banks, which makes it difficult to see dollar weakness ahead,” Zhu Runyu, an analyst at CITIC Futures Co., a unit of China’s largest listed brokerage, said in an e-mail today. “It will be difficult for gold to stage any meaningful rally against such a backdrop.”
Gold is on course for a second yearly decline as the Fed ended asset purchases that failed to stoke gains in consumer prices amid a slump in energy costs. Many officials said the central bank should remain attentive to evidence of a possible downward shift in longer-term inflation expectations, according to minutes of the Oct. 28-29 meeting released yesterday.
Futures Drop
The minutes showed a wide-ranging debate over whether to retain a pledge to keep rates near zero for a “considerable time.” Fed officials ultimately adopted the suggestion to add wording emphasizing that the timing would depend on economic data. Reports today may show U.S. consumer prices declined 0.1 percent last month and first-time jobless claims fell last week.
Gold for December delivery lost 1.2 percent to $1,179.90 an ounce on the Comex in New York, extending yesterday’s 0.3 percent decline. The aggregate number of futures contracts yet to be closed, liquidated or delivered rose on Nov. 18 to the highest since January 2013. Money managers have boosted wagers on lower gold prices to a four-week high, government data show.
In China, the world’s largest user, volumes for the benchmark bullion of 99.99 percent purity contracted yesterday to the lowest level this month on the Shanghai Gold Exchange, after expanding on Nov. 18 to the most since April 2013.
Silver for immediate delivery lost 0.6 percent to $16.055 an ounce, after declining 0.3 percent yesterday. Spot platinum slid 0.1 percent to $1,187 an ounce, extending yesterday’s 1.5 percent decline. Palladium added 0.1 percent to $765 an ounce after decreasing 1.3 percent yesterday.
Source: Bloomberg – Gold Holds Drop Below $1,200 as Dollar Strengthens, SPDR Shrinks
