Gold slips to two-week low

GOLD slipped to its lowest level in over two weeks on Monday as equities rallied and the dollar firmed, while prospects of monetary policy tightening in the United States ahead of a Federal Reserve meeting also weighed on the metal.

Spot gold was down 0.20% at $ 1,317 an ounce, as of 0423 GMT. Earlier in the session, it hit $1,315.10, its lowest since Aug 31.

US gold futures for December delivery fell 0.30% to $1,321.10 an ounce.

“Further risk- taking appetite left gold prices in the dust,” said OCBC analyst Barnabas Gan.

Asian shares hit a decade high on Monday and the dollar held firm near a seven-week high against the yen, in the start to a week in which the Fed is likely to announce balance sheet tapering. The two-day Fed Open Market Committee meeting, which begins on Tuesday, will be closely watched by markets as the US central bank is expected to announce balance sheet reduction in an effort to “normalize” monetary policy.

“Gold prices also came under some selling pressure, with investors dismissing geopolitical risks and instead focusing on the possibility of rate hikes from central banks,” ANZ analyst Daniel Hynes said in a note.

“Expectations of a rate hike by the Fed in December have risen sharply in recent weeks.”

Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding the non-yielding asset while boosting the dollar, in which the metal is priced.

Spot gold may drop to $1,309 per ounce, as it has broken a support at $1,321, said Reuters technical analyst Wang Tao.

Meanwhile, data showed speculators raised their net long position in COMEX gold contracts for the ninth straight week, bringing it to a one-year high in the week to Sept. 12.

In other precious metals, silver slipped 0.30% to $17.53 an ounce, after earlier hitting its lowest since Sept. 1.

Platinum was little changed at $963.35 an ounce, while palladium gained up to 0.50% at $927.47. —