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Gold Trades Little Changed as Dollar Falls From Five-Year High

November 25, 2014

San Francisco (Nov 25)  Gold traded steady as the dollar fell from a five-year high, boosting demand for the metal as an alternative investment.

The dollar lost as much as 0.2 against a basket of 10 currencies after touching the highest since March 2009. Bullion slid earlier after a government report showed the U.S. economy expanded more than expected, damping demand for the metal as a store of value.

Gold has fallen 14 percent from a 2014 high, and global holdings in exchange-traded products backed by the metal last week slumped to the lowest since May 2009, amid gains in the dollar on an improving U.S. economy. Faster growth supports the Federal Reserve’s decision last month to stop buying debt as policy makers monitor economic progress while deciding when to raise interest rates for the first time in eight years.

“Dollar weakness is putting some upward momentum on the gold market,” Phil Streible, a senior market strategist at R.J. O’Brien & Associates in Chicago, said in a telephone interview.

Gold futures for February delivery rose 0.2 percent to $1,198.90 an ounce on the Comex at 10:48 a.m. in New York. The metal declined as much as 0.6 percent earlier. Bullion posted two straight weekly gains through Nov. 21 amid central bank action from China to Japan to Europe to boost growth.

Trading today was more than double the 100-day average for this time of day, according to data compiled by Bloomberg.

U.S. gross domestic product grew at a 3.9 percent annualized rate in the third quarter, capping the strongest six months in a decade and topping the 3.3 percent estimate in a Bloomberg survey of economists, a government report showed today.

12-Year Rally

Gold climbed 70 percent from December 2008 to June 2011 as the Fed bought debt and held borrowing costs near zero percent in a bid to shore up economic growth.

Through last week, gold declined 0.3 percent this year. The metal in 2013 tumbled 28 percent, ending a 12-year bull run. A second straight annual drop would mark the longest slump since 1998.

Switzerland holds a referendum on Nov. 30 to require the Swiss National Bank to hold at least 20 percent of its assets in gold, up from about 8 percent, and never sell any. About 47 percent of voters oppose the measure and 15 percent were undecided, according to a gfs.bern poll released last week.

Silver futures for delivery in March advanced 1.6 percent to $16.70 an ounce on the Comex.

Source: Bloomberg

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