Gold slides to nine-and-a-half-month low as dollar rallies on US data

NEW YORK/LONDON — Gold fell more than 2% to a nine-anda-half-month low on Wednesday as a buoyant dollar extended its rally to the highest since 2003 on the back of upbeat US economic data that further cemented a case for increasing interest rates next month.

Bullion prices remained weak after minutes from the Federal Reserve’s Nov. 1-2 meeting showed policy makers appeared confident that the economy was strengthening enough to warrant interest rate increases soon.

Spot gold dropped 1.9% at $1,188.82 an ounce by 2:34 p.m. EST ( 1934 GMT), after falling 2.5% to $1,181.45, the lowest since Feb. 10. US gold futures settled down 1.8% at $1,189.30.

Many in the United States will be away from their desks on Thursday for the Thanksgiving Day holiday.

“The November Fed minutes contained little market-moving information which puts all the emphasis on ( Fed Chair Janet) Yellen’s December press conference and FOMC (Federal Open Market Committee) dot plot for clues on the future path of short term interest rates,” said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.

Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding assets such as bullion while boosting the dollar, in which it is priced.

Traders are pricing in a 100% chance of a December rate increase, according to the CME Group’s Fedwatch Tool.

US durable goods orders rebounded in October and jobless claims, though off a 43-year low, remained below a level consistent with a tightening labor market.

The data sent the dollar index to a fresh 13-and-a-half year high.

Gold has shed around 11% from a peak hit in the aftermath of the US election two weeks ago. The metal has been hit by expectations that the policies of US president-elect Donald J. Trump will boost economic growth and by strong US data supporting the case for a rate hike.

Among other precious metals, silver fell by as much as 3% to $16.14 an ounce, its lowest since early June.

Platinum shed 1% at $927.40 and palladium dropped 0.5% at $736.50. —