Gold declined, ending its longest run of gains in almost three months, as China eased concern about a devaluation of its currency.
Global equities rebounded, and demand ebbed for haven assets including bonds and precious metals, after the People’s Bank of China quelled fears of broader currency wars with verbal support for the yuan. Bullion rose in the previous five days.
Gold is often used as an alternative store of value and tends to rise when currencies weaken. The metal deepened losses Thursday as the dollar extended gains amid increasing expectations that improving economic growth will push the Federal Reserve to increase interest rates this year. Sales at U.S. retailers rose in July, and jobless claims are hovering close to a four-decade low, government data show.
“If the yuan devaluation will be slowed down substantially, then that removes some of the uncertainty in the market that has benefited gold,” Ole Hansen, an analyst at Saxo Bank A/S in Copenhagen, said by telephone. “We’re seeing traders putting some risk back on.”
Gold futures for December delivery declined 0.7 percent to settle at $1,115.60 an ounce at 1:52 p.m. on the Comex in New York, the biggest loss since July 24.
The metal has fallen 4.8 percent since the end of June and reached a five-year low in late July. A decline this quarter would be the fifth straight loss and the longest slump since 1997. The prospect for higher rates prompted investors to snub gold, since it doesn’t pay interest, unlike competing assets. Low inflation, a rally in equities and a stronger dollar have also weighed on prices.
“Gold may have just completed a minor bear market correction and is continuing a longer-term downtrend,” Walter Zimmerman, the chief technical analyst at United-ICAP, a brokerage in Jersey City, New Jersey, said in a telephone interview.
In the U.S., the four-week moving average for jobless claims declined to the lowest in more than 15 years, the Labor Department said Thursday. The Bloomberg Dollar Spot Index, a measure against 10 other currencies, climbed as much as 0.5 percent. Silver, platinum and palladium also declined.
“The stronger dollar and the jobless claims number are the two fundamental reasons” behind gold’s decline, Peter Thomas, a senior vice president for metals at Zaner Group LLC in Chicago, said in a telephone interview. “Gold had short-covering rally and finally just run out of momentum.”
(An earlier version of this story was corrected to reference yuan in fourth paragraph.)