Gold Set to Snap Three Weeks of Increases on Lower Energy Prices

Gold fell for a third day to head for the first weekly decline in a month as crude oil at the lowest level in four years increased prospects for a cooling of consumer prices, reducing demand for an inflation hedge.

Bullion for immediate delivery lost as much as 0.9 percent to $1,181.84 an ounce, the lowest since Nov. 20, and traded at $1,187.82 by 3:19 p.m. in Singapore, Bloomberg generic pricing showed. The metal is 1.1 percent lower this week, extending declines from a three-week high of $1,207.93 on Nov. 21, before a Swiss gold vote.

Gold is on course for a second annual drop in part as the Federal Reserve ended an asset-purchase program that failed to stoke inflation amid a slump in energy prices. Crude tumbled to the lowest since 2010 as OPEC took no action to ease an oversupply. Switzerland holds a national referendum on Nov. 30 that would require the central bank to hold a fixed portion of its assets in bullion.

“Crude oil prices affect inflation expectations and global economic growth, and therefore affect the price of gold,” said Xia Yingying, a Hangzhou, China-based analyst at Nanhua Futures Co. “The referendum in Switzerland on gold this weekend won’t offer much in terms of support as it looks unlikely to pass.”

Switzerland will vote for an initiative that would require the central bank to hold at least 20 percent of its assets from 8 percent in gold, all of which have to be stored in the country, and never sell any. A plurality of voters oppose the “Save Our Swiss Gold” measure, though a portion of them were still undecided, polls last week showed.

Thanksgiving

Gold for February delivery fell 0.9 percent to $1,186.90 an ounce on the Comex in New York. Floor trading in New York was shut yesterday for Thanksgiving and transactions will be booked today for settlement purposes.

The Bloomberg Dollar Spot Index rose 0.2 percent today, poised for the highest close since March 2009, as currencies of oil-producing nations weakened after OPEC kept its output target unchanged amid the highest U.S. production in three decades and signs of slowing demand.

Silver for immediate delivery fell as much as 1.2 percent to $16.0507 an ounce, the lowest since Nov. 20 and set to halt two weeks of gains. Spot platinum slid 0.2 percent to $1,215.11 an ounce, poised for a weekly decline. Palladium lost 0.3 percent to $802.75 an ounce for the first decline in seven days and trimming a second weekly increase.

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