Comments
Gold extended losses on Monday, falling towards a near-six-year low reached last week, pressured by a robust dollar and upbeat comments from Federal Reserve officials on a possible US rate hike next month.
Spot gold had dropped 0.7 per cent to $1,070.36 an ounce by 0320 GMT, down for a 13th session in the 16 trading days this month. The metal had declined to $1,064.95 last week, the lowest since February 2010.
Speculation that the Fed will lift interest rates for the first time in nearly a decade this year has intensified since the release of strong US jobs data earlier this month. Comments from Fed officials have boosted that view.
Higher rates tend to weigh on gold, as they lift the opportunity cost of holding non-yielding assets, while boosting the dollar.
FOMC meeting
“We perceive gold price at around $1,080 somewhat like a technical play, a reflection of market behaviour of ‘sitting on the fence’ as they await the FOMC meeting in December,’’ said OCBC Bank analyst Barnabas Gan, referring to the Federal Open Market Committee.
“We keep our year-end forecast of $1,050,’’ Gan said.
More pressure on bullion is expected as investors exit positions in the metal ahead of the looming US rate hike.
SPDR Gold Trust
Assets in SPDR Gold Trust, the world’s top gold-backed exchange-traded fund, slid 0.18 per cent to 660.75 tonnes on Friday, the lowest since September 2008.
Hedge funds and money managers switched to a bearish position in COMEX gold contracts in the shortened week to November 17, as prices fell to the lowest in nearly six years, US Commodity Futures Trading Commission data showed on Friday.
There is a “strong case’’ for raising interest rates when Fed policymakers meet next month, as long as US economic data does not disappoint, San Francisco Fed President John Williams had said on Saturday.
The Fed should “soon’’ be ready to raise interest rates as US central bankers grow confident that low inflation will rebound and that employment remains stable, William Dudley, the influential head of the New York Fed, had said on Friday.
Dollar vs other currencies
The dollar was trading near a seven-month high against a basket of six major currencies on Monday, weighing on gold.
A strong greenback makes dollar-denominated gold more expensive for the holders of other currencies. Other precious metals also tracked gold lower. Silver tumbled to $13.92 an ounce, the lowest since August 2009.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.