Gold set for long drop
The metal is set for a fifth quarterly drop, its longest losing streak since 1997.
|||New York - Gold fell for a fourth day after US consumer confidence unexpectedly rose, building the case for an interest rate increase this year. The metal is set for a fifth quarterly drop, its longest losing streak since 1997.
Bullion for immediate delivery fell as much as 0.5 percent to $1 122.20 an ounce, the lowest in a week, and traded at $1 123.20 by 11:50 am in London, according to Bloomberg generic pricing.
While higher consumer confidence this month helped US stocks erase losses, investors are wrestling with the possibility market volatility, concern over the depth of China’s slowdown and slumping commodity prices will keep the Federal Open Market Committee from raising rates. Higher rates curb gold’s appeal as the metal doesn’t pay interest.
“We’re now approaching the October FOMC and we can expect that the market watchers will be eyeing very closely what the Fed is going to say,” Barnabas Gan, an economist at Oversea- Chinese Banking, said by phone in Singapore. “There are two possibilities - one in October, one in December. Whether they hike on either of the months, our house view is that we are still looking for at least one hike. That would be negative for gold.”
Rate outlook
Fed-fund futures show a 16 percent chance of a 25 basis point increase next month, while the probability is 43 percent by December, based on data compiled by Bloomberg. Holdings in exchange-traded funds backed by gold increased for a fifth straight day as of Monday, data compiled by Bloomberg show.
China, rivaling India as the world’s largest bullion consumer, boosted central bank gold holdings 1 percent in August as the country sought to diversify its reserves. Bullion of 99.99 percent purity was little changed at 230.50 yuan a gram ($1 127.97 an ounce) on the Shanghai Gold Exchange, after dropping 1.3 percent on Tuesday.
Platinum rose 0.9 percent to $924.78 an ounce after slumping to $899 on Tuesday, the lowest level since December 2008. The metal is 14 percent lower this quarter. Palladium rose 1.4 percent to $666.75, trimming a third quarterly decline.
BLOOMBERG