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Gold hits ten-month low on strong dollar

The precious fell to its lowest since February after suffering from its biggest monthly decline in more than three years
Gold Jewellery

Gold prices on Thursday fell near a 10-month low after facing challenge from a stronger dollar and expectations of an Federal Reserve interest-rate increase in December.

The precious fell to its lowest since February after suffering from its biggest monthly decline in more than three years. Gold struggles to compete when interest rates rise as it doesn’t bear interest.

On Thursday, spot gold was down 0.4 percent at $1,168.27 an ounce at 1020 GMT, while U.S. gold futures for February delivery were down $4.00 an ounce at $1,169.90, Reuters reported.

“The key story for gold is still the combination of a stronger dollar and rising Treasury yields. Either of the two is not really helping gold at the moment,” Julius Baer analyst Carsten Menke was quoted by the news agency as saying.

“We’ve seen outflows of around 5 million ounces (from ETFs) since the U.S. election, and these are mainly from the U.S.-listed products. There is a real rotation away from safe-haven investments, and towards pro-growth assets,” he added.

According to Fed fund futures tracked by CME Group, the likelihood of a lift in Federal Reserve interest rates is now almost 99%, The Wall Street Journal said.

The demand of precious metal in India, one of the largest buyers of old in the physical metal, is falling down as traders believe imports could fall to a combined 60-70 tons over the next two months, the newspaper said citing Commerzbank AG.

“So far, it would appear that the low gold prices are failing to attract buyers. On the contrary, gold demand in India is even expected to decline sharply over the next few months,” the bank was quoted saying.

Meanwhile, among other metals, silver was down 0.7 percent at $16.35 an ounce, platinum was 0.7 percent lower at $904.75 and palladium was up 0.3 percent at $772.20.

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