Gold headed for the first monthly decline since May on growing expectation that the Federal Reserve will raise interest rates this year and as purchases through bullion-backed funds slowed.
The metal for immediate delivery was little changed at $1,314.18 an ounce by 11:44 a.m. in London, set for a 2.8 percent retreat this month, according to Bloomberg generic pricing. It reached a two-month low on Tuesday. Investors have bought the least metal through exchange-traded products since they cut holdings in April.
It’s the first time gold has dropped in August since 2009, with the metal generally climbing on jewelry demand ahead of the wedding and festival season in India, the second-largest consumer after China. The pullback has followed hawkish comments by Fed officials, prompting traders to boost bets on when the central bank will raise rates and boosting the dollar.
“Expectations of a rate hike is what’s been weighing on gold this month,” Adrian Ash, head of research at online trading service BullionVault, said by phone from London. “Still, prices are up by a quarter this year, it’s going to take more than one bad month to change sentiment towards the metal.”
Jobs report
Investors are now looking to U.S. jobs data due Friday for more clues on the strength of the economy. Traders see a 34 percent probability the Fed will raise borrowing costs next month, up from 18 percent at the start of August. The odds of an increase by December are at 59 percent.
Gold purchases through ETPs have slowed since holdings peaked at a three-year high on Aug. 11. The assets are up 25 metric tons so far this month, compared with increases of about 55 tons in July and 110 tons in June, data compiled by Bloomberg show.
In other precious metals news:
The FTSE/JSE Africa Gold Mining Index of producers fell for a third day to the lowest since June 29. Sibanye Gold Ltd., the biggest miner of South African bullion, dropped 5.7 percent. Silver climbed 0.7 percent to $18.7379 an ounce, paring this month’s loss to 7.9 percent. Platinum was up 0.3 percent, set for a 7.7 percent drop in August. Palladium gained 0.8 percent and is down 3.7 percent this month.
