Good time to buy: Gold at 4-month low

london — Gold fell for a third day on Monday to its lowest since mid-March after strong economic data in the United States and Germany bolstered expectations that central banks will raise interest rates.

Gold is highly sensitive to rising rates because they push up bond yields, increasing the opportunity cost of holding nonyielding bullion. They also tend to boost the dollar, in which gold is priced.

Spot gold, which dropped 2.3 per cent last week, was down 0.5 per cent at $1,207.27 an ounce by 0938 GMT, having touched $1,204.45, its lowest since March 15.

US gold futures for August delivery slipped by 0.3 per cent to $1,206.60.

“On the mind of the gold market is central bankers striking a more hawkish tone. Investors are now pricing in monetary tightening from most central banks,” said Danke Bank analyst Jens Pedersen.

The rationale for tightening was bolstered by better-thanexpected US jobs data and strong German export figures.

These also bolstered optimism about the global growth outlook, boosting stock markets and the dollar, encouraging investors to ditch gold for riskier assets.

US 10-year bond yields have risen sharply since late June and are near two-month highs, while gold is down nearly seven per cent from a high of $1,296.97 a month ago. — Reuters