Gold down on dollar, eyes big monthly fall

LONDON: Gold edged lower yesterday, heading towards its lowest level in nearly six years as the dollar hit a multi-month high and on track for its steepest monthly slide in 2-1/2 years on prospects of a US interest rate hike this year. Spot gold slipped 0.1 percent to $1,056.01 an ounce by 1053 GMT, not far off from of Friday’s $1,052.46, the lowest since February 2010. A stronger dollar, up to a fresh eight-month high against a basket of major currencies, weighed on gold and made it more expensive for foreign holders.

Bullion has lost 7.5 percent of its value in November, its biggest monthly dip since June 2013, as investors remained focused on a possibly imminent rate hike in the United States.

Gold, a non-interest-paying asset, could take a hit from higher rates as the dollar gains and the opportunity cost of holding it increases. The US Federal Reserve holds its next policy meeting on Dec. 15-16.

A US payrolls report on Friday will be even more closely watched than usual. A strong number after a surge in job growth in October could cement expectations that the Fed will deliver its first hike in almost a decade.

“A number close to the 200,000 mark will be sufficient to confirm in Fed’s mind that the time is right to act,” ICBC Standard Bank analyst Tom Kendall said.

The European Central Bank policy meeting on Thursday will also be eyed for impact on the currency markets. The ECB is widely expected to ease policy. “I thought there was a possibility that the euro had already anticipated everything that was going to be delivered by Draghi this week but it seems not,” ICBC StanBank’s Kendall said. —Reuters