Gold futures fell as analysts brought forward estimates for the Federal Reserve to raise U.S. interest rates, crimping demand for the metal as an inflation hedge.
Goldman Sachs Group Inc. revised its forecast for higher borrowing costs to the third quarter of 2015, rather than the first three months of 2016, citing an accelerating economy. The bank joins JPMorgan Chase & Co. and Bank of Tokyo-Mitsubishi UFJ Ltd. in moving up its estimates. The Fed has kept its benchmark lending rate near zero percent since December 2008.
Gold climbed for five straight weeks as central bank policy makers said after their June gathering that rates will stay low for a “considerable time.” Minutes from the meeting will be published on July 9. Gold slumped 28 percent last year on concern that the Fed would taper monetary stimulus as the economy improved.
“Perception of an early rate hike is very damaging for gold,” Blake Robben, a senior market strategist at Archer Financial Services in Chicago, said in a telephone interview. “The sentiment is turning negative.”
Gold futures for August delivery fell 0.3 percent to settle at $1,317 an ounce at 1:42 p.m. on the Comex in New York. Trading was 38 percent below the 100-day average for this time, according to data compiled by Bloomberg. On July 3, the price dropped 0.8 percent.
The metal climbed to $1,334.90 on July 1, the highest for a most-active contract since March 24. U.S. markets were closed July 4 for the Independence Day holiday.
The World Gold Council at an industry meeting today in London discussed possible changes to the century-old London benchmark fixing, used by mining companies to central banks to trade and value the metal.
Silver futures for September delivery fell 0.6 percent to $21.014 an ounce on the Comex. The price dropped 0.8 percent on July 3.
On the New York Mercantile Exchange, palladium futures for September delivery rose 0.8 percent to $868.95 an ounce. Earlier, the price reached $869.60, the highest since Feb. 23, 2001. The metal climbed for the 10th straight session, the longest rally since Sept. 14, 2012.
In the second quarter, palladium climbed 8.5 percent as supplies dwindled amid labor turmoil in South Africa, the world’s second-biggest producer.
Platinum futures for October declined 0.8 percent to $1,495.60 an ounce on the Nymex.
Impala Platinum Holdings Ltd., the second-largest producer, said it expects workers who walked out last week at the Marula mine in South Africa to report for duty tomorrow.
A five-month strike by 70,000 employees at mines owned by Impala, Anglo American Platinum Ltd. and Lonmin Plc. ended on June 23.
South Africa is the top platinum producer. Russia is the biggest source of palladium.