Gold Declines to One-Week Low on Bets Fed May Cut U.S. Stimulus
Gold fell to the lowest in more than a week as better-than-expected U.S. economic data reinforced the case for the Federal Reserve to slow stimulus.
The Institute for Supply Management’s non-manufacturing index rose to 58.6 in August, a report from the Tempe, Arizona-based group showed. The median forecast called for a drop to 55. A reading greater than 50 indicates expansion. Gold has declined 18 percent this year on speculation that the Fed will scale back bond buying as the economy improves. The Bloomberg Dollar Index, a gauge against 10 major currencies, rose as much as 0.6 percent.
“Stronger U.S. data is getting the market jittery again,” Tom Power, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “The strength in the dollar is working against gold.”
Gold futures for December delivery fell 1.2 percent to settle at $1,373 an ounce at 1:49 p.m. on the Comex in New York, after dropping to $1,364.70, the lowest since Aug. 22.
Earlier, the metal rose as much as 0.7 percent as the Senate Foreign Relations Committee voted yesterday to authorize President Barack Obama to conduct a limited military operation in Syria, boosting the appeal of haven assets.
Prices retreated 1.6 percent yesterday, the most in two months, as the U.S. faced opposition from Russia on the military strike.
Bullion has gained 16 percent from a 34-month low reached on June 28 as physical demand surged and demand for gold as a safe haven increased on increased concern about escalating tension in Middle East.
Silver futures for December delivery slumped 0.7 percent to $23.255 an ounce.
On the New York Mercantile Exchange, platinum futures for October delivery slid 0.8 percent to $1,482.10 an ounce.
Palladium futures for December delivery fell 1.6 percent to $687.20 an ounce. The price dropped for the sixth straight session, the longest slump in almost 16 months.
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