Gold Slides as Assets in Global ETPs Drop Most This Year

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Gold resumed its retreat in New York, falling for the eighth time in nine sessions, on signs of waning investor demand.

Money managers cut their bullish wagers on the metal by the most this year, U.S. government data showed after the market settled on Nov. 7. Holdings in global exchange-traded products backed by bullion tumbled 1.4 percent last week, the biggest drop in 2014.

Prices reached a four-year low last week on a stronger dollar and expectations that the Federal Reserve will raise interest rates as the economy improves, cutting demand for a store of value. Futures rose 2.4 percent on Nov. 7, the most since June 19, after a report showed U.S. employers added fewer workers than forecast in October. The unemployment rate still fell to the lowest since 2008.

“The confident gold bears saw Friday’s spike as the heat comes out of the rally as an opportunity to sell,” Tai Wong, the director of commodity products trading at BMO Capital Markets Corp. in New York, said in a telephone interview. “The market view remains that the Fed will raise rates by the middle of next year, which informs the bearish sentiment in gold.”

Gold futures for December delivery dropped 0.9 percent to settle at $1,159.80 an ounce at 1:46 p.m. on the Comex in New York. Prices are down 3.5 percent this year, after touching $1,130.40 on Nov. 7, the lowest since April 2010.

Trading was 51 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg shows.

UBS AG cut its one-month target for gold to $1,180 from $1,250 previously, while keeping its three-month forecast at $1,200, the bank said today in an e-mailed statement.

ETP Assets

On Nov. 7, holdings in gold ETPs declined 8 metric tons to 1,626.8 tons, the lowest since August 2009, according to data compiled by Bloomberg. Hedge funds cut their net-long position in U.S. futures and options by 36 percent in the week ended Nov. 4, the most since November 2013, according to U.S. Commodity Futures Trading Commission data.

“We find it difficult to see gold prices finding sustainable support in the near term as investment demand falls,” Lachlan Shaw, an analyst at Commonwealth Bank of Australia, wrote in an e-mail today.

Silver futures for December delivery fell 0.3 percent to $15.671 an ounce in New York. Prices dropped 2.4 percent last week, a third straight decline.

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