Gold extended losses as the Federal Reserve prepares to raise interest rates next year while other central banks boost stimulus, strengthening the dollar. Global bullion demand fell to a five-year low in the third quarter.
Gold for immediate delivery fell as much as 0.5% to $1,156.72 an ounce, and traded at $1,158.67 by 3:34 p.m. in Singapore, according to Bloomberg generic pricing. Holdings in the SPDR Gold Trust, the biggest exchange-traded product backed by the metal, fell to a six-year low yesterday, contracting for a seventh day in the longest run of declines since June 2013.
Bullion dropped last week to a four-year low of $1,132.16 and is heading for the first consecutive annual retreat since 2000 as a slump in oil prices and the end of bond buying by the Fed cut demand for an inflation hedge. The Bloomberg Dollar Spot Index is trading near a five-year high as the first U.S. rate rise since 2006 is probable next year, while central banks in Europe and Japan have taken more measures to support growth.
“The outlook for significant differences in monetary policy between the U.S. and economies outside the U.S. will continue to drive direction for precious metals,” Sun Yonggang, an analyst at Everbright Futures Co., wrote in a note today. “We remain cautious on gold.”
Global bullion demand declined 2.5% from a year earlier to 929.3 metric tons, the lowest since the last quarter of 2009, the London-based World Gold Council said today in a report. Jewelry consumption slipped 4%, while bar and coin purchases dropped 21%, it said.
Gold for December delivery traded at $1,157.80 an ounce on the Comex in New York from $1,159.10 yesterday. Most-active prices slid on Nov. 7 to $1,130.40, the lowest since April 2010.
Silver for immediate delivery declined 0.2% to $15.6558 an ounce, falling for a second day. Spot platinum lost 0.3% to $1,199 an ounce, while palladium slid 0.3% to $773.06 an ounce.
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