Gold dips to near 6yr low, set for 6th straight weekly drop

Kuwait Times - - BUSINESS -

LON­DON: Gold dipped to its low­est level in nearly six years yes­ter­day and was head­ing for a sixth straight weekly de­cline un­der pres­sure from a firm dol­lar and prospects of a US in­ter­est rate rise next month. Spot gold hit $1,055.99 an ounce, its low­est since Fe­bru­ary 2010, and was down 1.5 per­cent at $1,057.27 by 1314 GMT.

The metal was down 1.9 per­cent for the week. US gold fu­tures also fell 1.3 per­cent to $1,055.90 an ounce and were also headed for a sixth con­sec­u­tive weekly de­cline. Gold was un­der­mined by a firm dol­lar, trad­ing near an eight-month high against a bas­ket of ma­jor cur­ren­cies, mostly boosted by euro and Swiss franc weak­ness. The dol­lar-de­nom­i­nated metal be­comes more ex­pen­sive for for­eign in­vestors when the US cur­rency rises.

“The dol­lar is bid and you have the in­verse re­la­tion­ship with gold sim­ply be­cause the Fed is go­ing to be tight­en­ing,” So­ci­ete Gen­erale an­a­lyst Robin Bhar said.

“The omens are not pos­i­tive for gold in the lead-up to the De­cem­ber rate meet­ing.” The Fed­eral Re­serve is widely ex­pected to raise US rates for the first time in nearly a decade when it meets next on Dec. 15-16. Higher rates would rise the op­por­tu­nity cost of hold­ing non-yield­ing gold and could dent de­mand and boost the dol­lar. “Once again, gold is un­able to find a bid. Any small rally that we see is be­ing sold into,” said a Sydney-based pre­cious met­als trader. Buy­ing in China has been good but has been un­able to sup­port prices, the trader said. Pre­mi­ums on the Shang­hai Gold Ex­change, a proxy for de­mand in China, were trad­ing at $5-$6 an ounce, ver­sus $3-$4 at the be­gin­ning of the month. — Reuters

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