Gold rose off 15-month low as dollar rally pauses
New York (Oct 6) Gold rose on Monday as a surging dollar paused, but prices remained vulnerable just above a 15-month low touched earlier in the day on prospects of further gains in the U.S. currency and growing bets the Federal Reserve will raise rates in mid-2015.
Bullion had dropped nearly two percent on Friday and reached its weakest since June 28, 2013 at $1,183.46 an ounce in earlier trading, within reach of a four-year low under $1,180 an ounce.
Spot gold was last up 0.9 percent at $1,201 an ounce after earlier falling to $1,183.46 an ounce, its weakest since June 28, 2013. U.S. gold futures were up more than $9 near $1,202 an ounce.
Platinum, which fell 6.3 percent last week in its biggest weekly decline since Dec. 2011, touched its lowest since July 2009 on Monday.
Precious metals and commodities have tumbled as the dollar rallied to levels not seen for four years.
"These prices shouldn't come as a surprise ... the U.S. monetary policy starts tightening, the dollar is strong, rates are going higher, commodities are under pressure from more supply in China and gold is at the forefront of all of those fears and concerns,'' Societe Generale analyst Robin Bhar said.
"There's a little bit of physical buying, but premiums haven't changed. We have to see what happens later in the day. If demand is coming, of course, it will push up the premiums."
Premiums for gold were quoted at $1.20 to $1.60 an ounce to the spot London prices, unchanged from last week, despite a sharp drop in cash gold prices.
The absence of main gold consumer China is weighing on the physical market, which usually sees a pick up in demand from jewellers and retail investors when prices fall.
Chinese markets have been shut for national holidays and will reopen on Wednesday.
U.S. gold was $1,191.70 an ounce, down 0.10 percent.
The dollar held on Monday near a more than four-year high, touched after last week's upbeat U.S. nonfarm payrolls report increased speculation that the Federal Reserve would raise interest rates in mid-2015 or earlier.
Data from the Labor Department on Friday showed U.S. non-farm payrolls rose 248,000 last month and the jobless rate fell to 5.9 percent, the lowest since July 2008, underscoring that the U.S. economy continues to improve.
"We are just above the support of $1,180, we are going to test that level again pretty soon and after that there is the psychological level of $1,150."
Forecast-beating U.S. nonfarm payrolls data on Friday bolstered bets the Federal Reserve would raise interest rates in mid-2015, lifting the U.S. currency.
Non interest-bearing assets such as bullion have benefited from the Fed keeping interest rates near zero since December 2008.
"A strong dollar is a major problem for gold. Sentiment is very bearish but I think we expect some kind of rebound,'' said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong, who pegged support at $1,180 an ounce.
Speculators cut their bullish futures and option bets in gold to their smallest since early January, marking their seventh weekly consecutive decline, the Commodity Futures Trading Commission said on Friday.
Meanwhile, the absence of main gold consumer China is weighing on the physical market, which usually sees a pick up in demand from jewelers and retail investors when prices fall.
Chinese markets have been shut for national holidays and will reopen on Wednesday. Markets in Singapore, a key bullion trading center in southeast Asia, were also closed for a public holiday.
Premiums for gold in Asia were quoted at $1.20 to $1.60 an ounce to the spot London prices, unchanged from last week.
In Tokyo, sellers pushed up premiums for gold bars to 25 cents to spot London prices from zero last week to offset the decline in global prices.
Platinum was up 0.2 percent at $1,217.70 an ounce, having earlier fallen to $1,183.25 earlier. Palladium fell 0.1 percent to $752.10 an ounce, having touched its lowest since Feb. 27 earlier. The metal has dropped 17 percent from $910 last month, which was its highest since Feb. 2011.
Silver rose 0.8 percent to $16.94 an ounce after hitting its weakest since March 2010 at $16.66 earlier.
Source: CNBC
