Investors Sell Gold Holdings for 9th Day on Rate OutlookJoe Deaux and Whitney McFerron
Investors sold holdings in gold-backed funds for a ninth day, the longest streak since November, on speculation that the Federal Reserve is moving closer to raising U.S. interest rates.
Prices slid to a three-month low and platinum dropped to the lowest since 2009 after Fed Bank of Dallas President Richard Fisher said Monday that policy makers risk recession if they wait too long to raise rates. Assets in exchange-traded products backed by bullion fell to 1,658.5 tons, the smallest since January, data compiled by Bloomberg show.
Gold dropped 29 percent in the previous two years as the dollar surged and an improving U.S. economy fueled concern that the central bank would boost borrowing costs. Higher rates damp the appeal of the metal, which generally offer returns through price gains. Last week, bullion fell to erase its 2015 gain after a report showed the U.S. jobless rate at the lowest in almost seven years.
“There’s no question about it, the Fed has the opportunity now to act on raising rates, and I think they’ll take advantage of it at the June meeting,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “Rising interest rates strengthen the dollar and cause people to go find assets with a yield, because gold is a non-yielding asset.”
Gold futures for April delivery fell 0.5 percent to settle at $1,160.10 an ounce at 1:39 p.m. on the Comex in New York, after touching $1,153.80, the lowest since Dec. 1.
Policy makers are better off tightening earlier and more gradually than later and more quickly, Fisher said in his last speech at the helm of the Dallas Fed branch. Fed policy makers next meet March 17-18.
The Bloomberg Spot Dollar Index, which tracks the greenback versus 10 major peers, climbed for a fifth day to the highest on record in data going back to 2004.
Hedge funds and other money managers cut bets on price gains for the past five weeks and were the least bullish in three months in the week ended March 3, U.S. Commodity Futures Trading Commission data show.
Silver futures for May delivery slid 0.9 percent to $15.633 an ounce. Prices haven’t risen since Feb. 26.
Platinum futures for April delivery declined 1.6 percent to $1,130 an ounce at the New York Mercantile Exchange. The price touched $1,129, the lowest since July 2009. Palladium futures for June delivery tumbled 2.3 percent to $804.10 an ounce, the biggest loss since Jan. 29.