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Gold Futures Drop as Lower Oil, Stronger Dollar Curb Demand

November 28, 2014

New York (Nov 28)  Gold futures fell to the lowest in a week as a stronger dollar and slumping oil prices curbed demand for the metal. Silver slipped.
Bullion is set for the first weekly decline in three. The Bloomberg Dollar Spot Index was set to close at a five-year high and crude traded near the lowest level in four years as OPEC took no action to relieve a glut. A stronger dollar can cut demand for a store of value, while some investors buy gold to protect against consumer-price increases.
“Dollar strength over the past 24 hours or so is currently weighing down on gold,” UBS Group AG analysts wrote in a report today. “The slide in oil prices is also not helping.”


Gold for February delivery fell 1.2 percent to $1,182.90 on the Comex by 7:50 a.m. in New York. Prices reached $1,178.20, the lowest since Nov. 20, and are down 1.3 percent this week. Floor trading in New York was shut yesterday for Thanksgiving and transactions will be booked today for settlement purposes.

Futures trading volume on the Comex was almost triple the 100-day average for this time of day, data compiled by Bloomberg show. Bullion for immediate delivery lost 0.7 percent to $1,184.54, according to Bloomberg generic pricing.

The dollar strengthened amid speculation OPEC’s decision will stimulate the U.S. economy while weighing on the euro and commodity currencies. Gold touched a four-year low earlier this month as the greenback rallied on expectations for higher U.S. interest rates.

Swiss Vote

Switzerland will vote Nov. 30 on an initiative that would require the central bank to hold at least 20 percent of its assets in gold from about 8 percent now. A plurality of voters oppose the measure, though a portion were still undecided, polls released last week showed.

“Whichever way the vote goes, there will be a knee jerk reaction to it,” David Govett, head of precious metals at broker Marex Spectron Group, said in an e-mailed note. “In the event of an unlikely yes vote, the actual passing of the law is years away.”

Silver for March delivery on the Comex slumped as much as 3.6 percent to $16.01 an ounce, the lowest since Nov. 19, and was last at $16.075.

Platinum for January delivery on the New York Mercantile Exchange fell 1 percent to $1,216.50 an ounce. Palladium for March delivery advanced 0.5 percent to $806.80 an ounce. It reached the highest since Nov. 3.
Source: Bloomberg

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