Gold price extends slide for fifth session, hits four-week low

London (Nov 3)  Gold slipped to a four-week low on Monday, easing for a fifth straight session as prices came under pressure from strength in the dollar and speculation that the U.S. Federal Reserve may press ahead with an interest rate rise this year.

The Fed last week put a December rate rise into play, dampening earlier talk that a string of downbeat U.S. data and global growth concerns could push back to next year the first increase in nearly a decade.
 
Traders will be watching this week's U.S. economic data closely, particularly the bellwether non-farm payrolls report on Friday, for clues on whether or not the Fed will move before the end of the year.

Rising rates would pressure gold because they would lift the opportunity costs of holding non-yielding assets while boosting the dollar, in which bullion is priced.

Spot gold was down 0.2 percent at $1,130.66 an ounce at 1030 GMT, having earlier touched its lowest since Oct. 5 at $1,130.20. U.S. gold futures for December delivery were down $5.70 at $1,130.20.
 
"$1,130-1,133 is a decent support level for now, but it will be interesting to see where we are at the end of the week," Mitsubishi analyst Jonathan Butler said. "The ADP data and the non-farm payrolls should give a better signal on where the Fed is heading.

"The Fed could quite easily make a justification for delaying a rate rise if it chose to ... That said, they have clearly intended to raise rates in 2015 (and) this is their last opportunity."
 
U.S. economic data on Monday was tentatively supportive of a rate hike this year. Manufacturing activity in October hit a 2-1/2 year low, but a rise in new orders offered hope that the United States might be over the worst.

Other data showed construction spending rose in September to its highest in 7-1/2 years, indicating that the economy remained on firmer ground despite signs of consumer spending cooling.

Holdings in the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Trust, fell nearly 3 tonnes to 689.28 tonnes on Monday, the lowest in three weeks.

"Physically backed gold products (have) hardly recorded inflows since summer, signalling investor reluctance to return to the market," Julius Baer said in a note.

Among other precious metals, silver was down 0.6 percent at $15.27 an ounce, platinum slipped by 0.5 percent to $968 and palladium fell by 1 percent to $641.47.

Source: Reuters