Gold futures fell to the lowest since January as the outlook for higher U.S. interest rates and a stronger dollar cut demand for precious metals as hedges against inflation. Silver dropped to a four-year low.
Money managers cut their bullish gold wagers for six straight weeks, the longest exit in more than four years, government data show. Global holdings in exchange-traded products backed by the metal last week shrunk to the lowest since 2009 as prices move close to erasing their 2014 gain.
Bullion, which rallied in the first half of the year amid escalating tensions in Ukraine and the Middle East, posted its first quarterly decline in 2014. Silver slumped 12 percent this month, the biggest decline since April 2013, when both metals fell into a bear market.
“It’s really been the dollar that probed gold lower since the beginning of July,” Adrian Day, the president of Adrian Day Asset Management in Annapolis, Maryland, said in a telephone interview. “Silver is gold on steroids and tends to exaggerate the moves.”
Gold futures for December delivery slid 0.6 percent to settle at $1,211.60 an ounce on the Comex in New York at 1:43 p.m. after touching $1,204.30, the lowest since Jan. 2. Prices fell 8.4 percent this quarter.
The greenback climbed to the highest since 2010 against a basket of 10 currencies today and is heading for the biggest quarterly gain since 2008. The Fed on Sept. 17 raised its outlook for interest rates, signaling the central bank is committed to keeping inflation in check.
Jeffrey Currie, the head of commodities research at New York-based Goldman Sachs Group Inc., says the worst isn’t over for gold, forecasting prices at $1,050 by year-end. Societe Generale SA is also expecting more losses.
Silver futures for delivery in December dropped 2.9 percent to $17.057 an ounce on the Comex. The metal touched $16.85, the lowest since March 2010, and lost 19 percent this quarter, the most since mid-2013.
Palladium futures for December delivery slid 1.8 percent to $775.15 an ounce. The price dropped 15 percent this month, the biggest decline since September 2011.
Platinum futures for January delivery lost 0.7 percent to $1,300.50 an ounce. The commodity fell 12 percent this quarter, the most in more than a year.