Gold declined for a third day this week as investors weighed the likelihood of higher US interest rates after a consumer confidence gauge unexpectedly dropped.
Bullion has slumped this month against the backdrop of a firmer US dollar and a drumbeat of commentary from US Federal Reserve officials that higher US borrowing costs are needed.
On Friday, futures pared declines after a survey showed consumer confidence unexpectedly fell to a one-year low this month as Americans soured on the outlook for the economy amid a contentious presidential campaign.
Photo: Bloomberg
“There’s uncertainty on the part of investors who don’t really know what the Fed is going to do in terms of hiking rates in December,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said by telephone. “But the more data that comes in a bit more mixed or on the slightly weaker side, the more investors struggle with the idea the Fed hikes in December, and that shifts gold around.”
Gold futures for December delivery on Friday slid 0.2 percent to settle at US$1,255.5 an ounce (28.3g) at 1:39pm on the Comex in New York. However, it still gained 0.3 percent from the previous Friday’s US$1,251.9 an ounce.
Bullion for immediate delivery was little changed.
The probability that the Fed will raise rates before the end of this year rose to 70 percent, up from 52 percent a month ago. Higher rates reduce the appeal of gold, which does not pay interest like assets such as bonds or equities, while economic concerns boost the metal’s appeal as a haven.
Holdings in exchange-traded funds (ETFs) increased to the highest since 2013. Assets in gold-backed ETFs rose 1.94 tonnes to 2,050.3 tonnes as of Thursday, data compiled by Bloomberg show.
This year, the holdings have surged 40 percent, with most of the increase coming in the first half.
Other commodities:
Silver futures for December delivery slid 0.1 percent to US$17.441 an ounce on the Comex.
On the New York Mercantile Exchange, platinum and palladium climbed.
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