Gold Drops to One-Month Low as Investors Wait for Fed Meeting

  • Bullion ETP holdings decline to lowest in three weeks
  • Futures on Comex post third weekly loss, longest since July

Gold fell to a one-month low and trading volume declined as investors held off on making big moves before Federal Reserve policy makers meet next week.

While Fed fund futures shows that traders have backed away from expectations that the central bank will tighten this month, economists surveyed by Bloomberg are still nearly balanced between those who expect a rate increase and those who say officials will delay any action. Higher borrowing costs reduce bullion’s allure because it doesn’t offer returns, unlike assets such as bonds or equities. Fed policy makers meets Sept. 16-17.

Gold is headed for a third straight annual loss as steady growth for U.S. jobs and the economy strengthened the dollar and bolstered the case for the Fed to raise interest rates for the first time since 2006. Futures trading was about 22 percent below the 100-day average on Friday, data compiled by Bloomberg show.

“There’s no help for gold today as we wait for the Fed,” George Gero, a vice president of global futures at RBC Capital Markets in New York, said in telephone interview. “After a hike, that boosts the dollar, and a strong dollar is a main reason for the sellers in gold.”

Gold futures for December delivery lost 0.5 percent to settle at $1,103.30 an ounce at 1:40 p.m. on the Comex in New York, after touching $1,097.70, the lowest since Aug. 11. Prices had a third straight week of declines, the longest streak since late July.

Holdings in global exchange-traded products backed by bullion dropped 0.4 percent in five straight losses to 1,517.5 metric tons as of Thursday, the lowest since Aug. 20, data compiled by Bloomberg show.

Silver futures also fell on the Comex. Platinum and palladium retreated on the New York Mercantile Exchange.

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