BLBG: Gold Little Changed Near Eight-Month Low as Silver Drops
Gold traded little changed after falling to an eight-month low in New York as investors weighed an improving U.S. economy against speculation lower prices may attract purchases. Silver dropped to a four-year low.
Gold is headed for its first quarterly loss this year as the Bloomberg Dollar Spot Index rose to a four-year high and investors cut gold-backed fund holdings. The Federal Reserve raised interest-rate projections for 2015 last week, even as it maintained a pledge to keep rates low for a considerable time, and stayed on course to end monthly bond buying in October.
Bullion’s 14-day relative strength index held below 30 for a 10th day, signaling to some investors who study charts that prices may be poised to rebound. Trading volumes in China, which replaced India as the largest buyer in 2013, increased last week. Indian demand typically picks up from about September before the country’s festival period and wedding season.
“Investor sentiment has shifted from lack of conviction to bearish as the macro environment has turned increasingly negative for gold,” analysts at Barclays Plc wrote in a report today. “Expectations of rising rates and a stronger dollar continue to pressure gold. However, gold is still likely to draw some support from the physical market during the seasonally strong period for consumption.”
Gold for December delivery lost 0.1 percent to $1,215.50 an ounce by 7:16 a.m. on the Comex in New York. Prices reached $1,208.80, the lowest since Jan. 2, and ended 2013 at $1,202.30. Gold for immediate delivery fell 0.1 percent to $1,214.61 in London, according to Bloomberg generic pricing.
Trading Volume
Futures trading volume was 27 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg show.
Holdings in gold-backed exchange-traded products fell 10.1 metric tons on Sept. 19, the most since December, to a five-year low of 1,696.3 tons, data compiled by Bloomberg show. Money managers cut their net-long position, or bets on higher gold futures, for a fifth week, with speculators boosting short bets to the highest level since June in the week ended Sept. 16, U.S. Commodity Futures Trading Commission data show.
“Gold is very likely on its way to erasing the year’s gains,” said Barnabas Gan, an economist at Singapore-based Oversea-Chinese Banking Corp. “With the Fed likely to end its quantitative-easing program at its next meeting, the market will likely turn eyes on the Fed’s next move in normalizing monetary policy via higher interest rates.”
Bullion reached $1,392.60 in March as rising geopolitical tensions, including Russia’s annexation of the Ukrainian region of Crimea, spurred haven demand.
Silver for delivery in December dropped 0.8 percent to $17.705 an ounce in New York, reaching $17.325, the lowest since July 2010. An ounce of gold bought as many 69.67 ounces of silver in London today, the most since June 2010.
Platinum for delivery in October lost 0.4 percent to $1,331.70 an ounce, after touching $1,328, the lowest since Dec. 24. Palladium for delivery in December fell 0.5 percent to $808.65 an ounce. It slid to $805.45, the lowest since May 16.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editors responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net Nicholas Larkin
