Gold Slides on Stronger Dollar, Narrows Gap With Platinum

Chicago (Sept 26)  Gold prices fell Friday as the dollar continued marching higher on expectations of rising U.S. interest rates.

Gold for December delivery, the most actively traded contract, was recently down 0.4% at $1,216.80 a troy ounce, on the Comex division of the New York Mercantile Exchange.

Pushing gold lower was a strengthening dollar. The ICE U.S. Dollar Index extended its longest winning streak in at least 28 years Friday, as it rose for an 11th straight week against a basket of major currencies. Investors have piled into the greenback in recent weeks, betting that the Federal Reserve is closer to raising interest rates, a move that would make the dollar more attractive to yield-seeking investors. That is bad news for gold, which investors often buy as a hedge against a weaker U.S. currency, and which struggles to compete with other assets when interest rates rise.

"Gold continues losing its battle to the U.S. dollar," analysts from Kitco Metals wrote in a note to investors.

Platinum for October fell 0.7% to $1,305.80 a troy ounce, closing the gap with gold to $89, the narrowest this year.

Palladium for December delivery slipped more than 1% to $792.20 a troy ounce, its lowest price in nearly five months. Prices took a 2% hit Thursday, after investors reversed their view of a potential sale of the metal by the Russian government to OAO  Norilsk Nickel,  GMKN.MZ +0.98%     the world's largest palladium producer.

Speculation that Russian government stores of palladium were near exhaustion had been a source of support for prices in recent years, as Moscow slowed shipments of the precious metal. But the size of the proposed deal between the Kremlin and Norilsk, at nearly $2 billion, reanimated talk that the government's hoard is larger than previously thought.

Source:  WSJ