Gold Extends Drop to Three-Week Low on Outlook for U.S. Stimulus

Gold declined for a fourth day to a three-week low in London on speculation a strengthening U.S. economy will spur the Federal Reserve to slow stimulus. Silver reached the lowest in four weeks.

The Bloomberg U.S. Dollar Index, a measure against 10 major currencies, reached an eight-week high. U.S. employers added a higher-than-expected 204,000 workers last month, Labor Department data showed Nov. 8. Global equities are trading about 1.7 percent below a more than five-year high reached Oct. 30.

Gold is set for the first annual drop in 13 years as some investors lost faith in the metal as a store of value and on speculation a strengthening economy will spur the Fed to slow debt purchases. Dallas Fed President Richard Fisher, who said he wouldn’t rule out backing a reduction in bond buying by March, said in a speech in Melbourne today that monetary accommodation “becomes riskier by the day.”

“The market seems concerned that the tapering of quantitative easing may start sooner than later and that seems to be weighing on sentiment,” William Adams, an analyst at Fastmarkets.com in London, wrote today in a report. “With effervescent equity markets, a strong dollar and generally good economic data, it seems as though precious metals are out of favor.”

Gold for immediate delivery fell 0.2 percent to $1,280.64 an ounce by 9:55 a.m. in London. It reached $1,276.58, the lowest level since Oct. 17. Bullion for December delivery lost 0.1 percent to $1,279.80 on the Comex in New York. Futures trading volume was 20 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 increased for a fourth day yesterday, rising 0.1 metric ton to 1,876.7 tons, data compiled by Bloomberg show. Assets reached 1,874.9 tons on Nov. 5, the lowest since April 2010.

Silver for immediate delivery slid 1 percent to $21.1528 an ounce in London, after falling to $21.068, the lowest since Oct. 15. Palladium fell 0.8 percent to $748.53 an ounce. Platinum added 0.1 percent to $1,432.90 an ounce. It reached a three-week low of $1,425.48 yesterday.

A strike in South Africa over wages called by the National Union of Mineworkers at Northam Platinum Ltd. that began Nov. 4 continues, Ecliff Tantsi, chief negotiator for the NUM, said by phone.

To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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