Gold Drops in New York Amid Waning Investor Demand

New York (Dec 29)  Gold futures fell for the fourth time in five sessions amid waning investor demand for a store of value.

Holdings in exchange-traded funds backed by bullion fell 0.6 percent last week, extending a drop to the lowest since 2009. Futures trading was 52 percent below the 100-day average for this time of day, data compiled by Bloomberg show.

Gold is headed for a second straight annual loss for the first time since 1998. Government data last week showed that the U.S. economy grew at the fastest pace in 10 years and claims for jobless insurance touched the lowest since early November, boosting speculation that the expansion is robust enough for the Federal Reserve to start raising interest rates.

“There’s not a much to give gold a boost, and there’s not a lot of liquidity here today,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “Gold prices are going to go a lot lower in 2015, especially once the first rate increase occurs.”

Gold futures for February delivery slipped 0.7 percent to $1,186.60 an ounce at 10:03 a.m. on the Comex in New York. Through Dec. 26, the price fell 0.6 percent in 2014, after tumbling 28 percent last year.

Strengthening physical demand may still provide support for prices, Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen, said in an e-mail. China imported 149,257 kilograms of gold from Hong Kong in November, up 34 percent from the previous month, according to data today from the city’s Census and Statistics Department.

Silver futures for March delivery retreated 1.4 percent to $15.925 an ounce on the Comex, falling for the second time in three sessions.

Source: Bloomberg