Gold Trades Near Two-Week Low on Stronger Dollar, Slowing Demand
London (Nov 5) Gold traded near a two-week low in London as a strengthened dollar curbed demand for an alternative investment and on speculation physical buying slowed. Platinum was little changed as a mine strike in South Africa continued.
The Bloomberg U.S. Dollar Index, a measure against 10 currencies, was little changed after reaching the highest since Sept. 18 yesterday. Bullion fell the past five days and a sixth successive drop would be the longest losing run since May. Physical demand from China “weakened markedly” in the past few days, Mumbai, India-based AnandRathi Commodities Ltd. said today in a report.
Gold is set for the first annual drop in 13 years as some investors lost faith in the metal as a store of value. The Federal Reserve last week maintained its $85 billion in monthly bond purchases, noting that there are signs of “underlying strength” in the economy. The central bank will start cutting debt buying in March, according to an Oct. 17-18 Bloomberg News survey of economists.
“The dollar has strengthened and is capping and pushing gold lower,” Robin Bhar, an analyst at Societe Generale SA in London, said today by phone. “We probably need gold below $1,300 an ounce to really stir up any more physical interest.”
Gold for immediate delivery lost 0.2 percent to $1,312.36 an ounce by 9:43 a.m. in London. It fell to $1,306 on Nov. 1, the lowest since Oct. 17. Bullion for December delivery slipped 0.2 percent to $1,311.60 on the Comex in New York. Futures trading volume was 41 percent below average for the past 100 days for this time of day, data compiled by Bloomberg showed.
ETP Holdings
Holdings in gold-backed exchange-traded products fell 0.3 metric ton to 1,875 tons yesterday, remaining at the lowest since April 2010, data compiled by Bloomberg show.
Fed Governor Jerome Powell said yesterday the central bank will probably sustain its stimulative policy for some time, and it’s unclear when any tapering of $85 billion in monthly bond purchases will begin. Boston Fed President Eric Rosengren said more needs to be done until the labor market gains strength. The Fed’s next meetings are Dec. 17-18, Jan. 28-29 and March 18-19.
“The Fed’s tapering is highly data-dependent and the market will focus very much on the employment” data, said Mark Keenan, a strategist at Societe Generale SA in Singapore. “Anything that suggests the stimulus will remain in place will be supportive for gold.”
Mine Strike
Silver for immediate delivery was little changed at $21.6425 an ounce in London, and reached $21.5625 earlier today, the lowest since Oct. 17. Palladium fell 0.6 percent to $743.95 an ounce. Platinum lost 0.3 percent to $1,449.52 an ounce. Prices declined 2.1 percent since reaching a seven-week high on Oct. 30.
A strike that began Nov. 3 at Northam Platinum Ltd. in South Africa over wages continued, and the National Union of Mineworkers and the company will meet for talks, Ecliff Tantsi, chief negotiator for the union, said today. Anglo American Platinum Ltd., the biggest producer, will start talks with the Association of Mineworkers and Construction Union on Nov. 13, a company spokesman said.
“Major gains” in platinum prices are unlikely unless strikes are long lasting, James Steel, a HSBC Securities (USA) Inc. commodities analyst in New York, wrote in a report yesterday. Stockpiled metal may be able to fill any production shortfall in the near term, he said.
