Gold pared a third weekly drop as the US dollar halted a rally that sent bullion prices to a nine-month low and pushed silver into a bear market.
Bullion’s first gain in four days cut this week’s loss to 1.9 percent. Prices have tumbled as strong economic data and the prospect of more spending after Republican candidate Donald Trump’s US presidential election win boosted bets for higher interest rates.
Investors are selling out of gold-backed funds at the fastest pace in three years.
Photo: Reuters
The metal rebounded on Friday as the Bloomberg Dollar Spot Index retreated from a recent high. Gold’s decline earlier stalled at US$1,171.18 an ounce, which is near a 61.8 percent retracement of the rally from December to July. The Fibonacci figure is used by some traders and analysts to determine support levels.
“There’s a good argument to be made that this is a calm before the storm,” Anthem Blanchard, CEO of Anthem Vault in Austin, Texas, said in a telephone interview. “There’s probably going to be a lower-than-expected rate increase, or maybe it will be the same as last year. Those are some real catalysts for gold prices in dollar terms.”
Gold for immediate delivery rose 0.2 percent to US$1,184.49 at 10:25am in New York, according to Bloomberg generic pricing. It is down 7.2 percent this month, heading for the biggest monthly drop since June 2013.
Traders expect the US Federal Reserve to raise rates next month, curbing the appeal of owning bullion because it does not provide any yield. Holdings in gold-backed funds have dropped 85.5 tonnes so far this month to 1,902 tonnes, the lowest since June, data compiled by Bloomberg show.
“After Trump won the presidential election, the market sentiment has been changing dramatically,” Emori Capital Management Inc president Tetsu Emori said by telephone. “Gold is being pushed down by the stronger dollar and an interest-rate raise. Investors are looking to buy more risky assets rather than gold as a safe haven.”
In other precious metals:
Gold futures for February delivery slid 0.4 percent to US$1,187.30 an ounce on the Comex, which was closed on Thursday for a US public holiday.
Silver futures for March delivery gained 0.6 percent to US$16.59 an ounce.
On the New York Mercantile Exchange, platinum dropped, while palladium climbed.
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