Gold Falls as Fed’s Fisher Says Inflation Isn’t a Concern

Gold futures declined on signals that U.S. inflation concerns eased, while the dollar extended a rally to the highest in more than five years, eroding demand for the precious metal as a store of value.

Richard Fisher, the president of the Federal Reserve Bank of Dallas, said he is not concerned about U.S. inflation, according to an interview in the Financial Times. The greenback climbed to the highest since March 2009 against a basket of 10 currencies as Japan and Europe added to monetary stimulus.

Global holdings in exchange-traded products backed by gold last week slumped to the lowest since May 2009. They have dropped 13 percent in the past 12 months. Inflation has remained below the Fed’s 2 percent target, and the central bank halted debt purchases following gains in the labor market.

“There was no need to be long gold because Richard Fisher from the Fed said he did not see inflation on the horizon,” George Gero, a precious-metals strategist at RBC Capital Markets in New York, said in a telephone interview. “So the dollar has been strong, and the strong dollar is not helpful to gold.”

Gold futures for February delivery dropped 0.2 percent to settle at $1,196.60 an ounce at 1:40 p.m. on the Comex in New York. Earlier, the price climbed as much as 0.5 percent to $1,204.50. Aggregate trading was 47 percent above the 100-day average, according to data compiled by Bloomberg.

‘Volatile Window’

“We are in a very volatile window” before the U.S. Thanksgiving holiday on Nov. 23, Kitco Metals Inc. in Montreal said. In the short term, gold remains “a dollar-influenced asset class, according to a daily report.

Gold has erased this year’s gain, falling 14 percent from the 2014 high of $1,392.60 on March 17. The dollar has climbed 8 percent against the currency basket.

In the week ended Nov. 18, hedge funds added to bullish gold wagers at the fastest pace since June as moves to shore up economies in China, Japan and Europe helped stem the metal’s rout in prices. Futures have climbed 5.9 percent from a four-year low of $1,130.40 on Nov. 7.

Gold climbed 70 percent from December 2008 to June 2011 as the Fed bought debt and held borrowing costs near zero percent in a bid to shore up economic growth. The price has tumbled 38 percent from a record $1,923,.70 on Sept. 6, 2011.

A gauge of 30 mining companies, including Barrick Gold Corp., the world’s top producer, has dropped 14 percent this year.

In 2014, gold has declined 0.5 percent. The metal in 2013 tumbled 28 percent, ending a 12-year bull run. A second straight annual drop would mark the longest slump since 1998.

Swiss Vote

Swiss National Bank President Thomas Jordan took to a church pulpit to warn voters that passing an initiative requiring the central bank to hold a fixed portion of its assets in gold risked harming the economy. The national referendum will be on Nov. 30.

A ‘yes’ vote would mean the purchase of about 1,500 metric tons of gold over five years, ‘‘and give bullion a significant morale boost,” James Steel, an analyst at HSBC Securities (USA) Inc., said today in a report.

Silver futures for March delivery fell 0.1 percent to $16.435 an ounce. Trading was 82 percent above the 100-day average, according to Bloomberg data. The price has dropped 15 percent this year.

On the New York Mercantile Exchange, palladium futures for March delivery declined 0.6 to $791.65 an ounce. Trading more than doubled compared with the 100-day average.

Platinum futures for January delivery fell 1.6 percent to $1,207.50 an ounce, the biggest drop for a most-active contract since Oct. 30.

Palladium has gained 10 percent this year, while platinum dropped 12 percent. The metals are used mostly in pollution-control devices in vehicles.

Supplies in 2015 will trail demand for the fourth straight year on car demand in North America and China, according to Johnson Matthey Plc.

The London-based company makes about one in three of the world’s catalytic converters.

Before it's here, it's on the Bloomberg Terminal.