BLBG: Gold Drops as Inflation Concern Fades; Platinum at Five-Year Low
Gold and silver fell, while platinum reached a five-year low, as slumping oil prices cut demand for an inflation hedge and the dollar strengthened.
About 89 percent of respondents in a Bloomberg Global Poll said disinflation or deflation is a greater threat in the euro area than inflation over the next year. West Texas Intermediate crude is heading for the longest run of weekly declines in almost three decades amid speculation that OPEC will refrain from cutting production to ease concern of a supply glut.
Investors, who often buy gold to protect against rising consumer prices, are holding the least bullion through exchange-traded products since 2009. The metal has fallen four of the past five days and is down 2.1 percent this week as the dollar extended its rally on speculation that U.S. policy makers will raise interest rates next year.
“Persistent outflows from gold ETFs further suggest how fragile sentiment toward gold has turned,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a report today. “U.S. equities and slumping oil prices continued to weaken appetite for the yellow metal.”
Gold for immediate delivery slid 0.7 percent to $1,154.19 an ounce by 9:39 a.m. in London, according to Bloomberg generic pricing. Gold for December delivery lost 0.8 percent to $1,151.70 on the Comex in New York.
Trading Volume
Futures trading volume was double the average for the past 100 days for this time of day, data compiled by Bloomberg show.
Holdings in gold-backed ETPs slipped 2 metric tons to 1,618.1 tons yesterday, the lowest since May 2009, data compiled by Bloomberg show. Global bullion demand fell to the lowest in almost five years in the third quarter, the World Gold Council said in a report yesterday.
New York Fed President William C. Dudley said yesterday that raising interest rates too early poses a bigger risk to the economy than acting too late. Next week, the central bank will release minutes of its October 28-29 meeting, when it ended its asset-purchase program.
“Unless some material change occurs in the U.S. economy, we believe a rate hike remains on the cards, keeping gold price weak,” Zhu Runyu, an analyst at CITIC Futures Co., a unit of China’s largest listed brokerage, said in an e-mail today.
Silver for immediate delivery dropped 1.9 percent to $15.3606 an ounce in London, set for a fifth weekly decline. Palladium lost 0.1 percent to $767 an ounce. Platinum fell 0.4 percent to $1,191.88 an ounce, and touched $1,186.75, the lowest since July 2009.
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: Lynn Thomasson at lthomasson@bloomberg.net Nicholas Larkin
