Gold price hits near 6-year low, set for another weekly drop
San Francisco (Nov 27) Gold dropped almost two percent to a near six-year low on Friday, set for a sixth straight weekly decline under pressure from a firm U.S. dollar and prospects of a U.S. interest rate rise next month.
Spot gold hit $1,052.46 an ounce, its lowest since February 2010, and was down 1.2 percent at $1,057.50.
Spot prices were down about 2 percent for the week. U.S. gold futures hit a six-year low of $1,051.10 an ounce before closing down 1.3 percent at $1,056.20 and skidding to a sixth straight weekly decline.
Gold was hit by the dollar's advance. The greenback was trading near March's multi-year highs against a basket of major currencies.
"The chatter is all about exchange rates ... Gold is down on the dollar," said Phillip Streible, senior commodities broker for RJO Futures in Chicago.
Greenback-denominated commodities like gold become more expensive for foreign investors when the U.S. currency rises.
The Federal Reserve is widely expected to raise U.S. rates for the first time in nearly a decade when it meets next on Dec. 15-16. Higher rates would rise the opportunity cost of holding non-yielding gold and could dent demand and boost the dollar.
"The omens are not positive for gold in the lead-up to the December rate meeting," Societe Generale analyst Robin Bhar said.
Buying in China has been good but has been unable to support prices, traders said.
Premiums on the Shanghai Gold Exchange, a proxy for demand in China, were trading at $5-$6 an ounce, versus $3-$4 at the beginning of the month.
Sell gold because of Draghi? That’s ridiculous
However, other physical demand indicators were not upbeat.
India's gold buying in the key December quarter is likely to fall to the lowest level in eight years, hurt by poor investment demand and back-to-back droughts that have slashed earnings for the country's millions of farmers.
China's net gold imports from main conduit Hong Kong fell in October from a 10-month high, data showed on Thursday.
Precious metals funds posted their biggest net outflow last week in around four months, said Bank of America Merrill Lynch.
In other precious metals, silver, platinum and palladium were all heading for weekly declines. Silver was down 1.2 percent at $14.08 an ounce, platinum was down 1.9 percent at $834.25, not far off a seven-year low hit earlier in the week. Palladium dropped 1.5 percent to $547.25.
Soiurce: CNBC
