Gold Declines Most in Two Weeks on Fed Concern; Platinum Tumbles

  • Gold posts second straight drop on resilient U.S. growth
  • Silver, platinum and palladium slide more than 2 percent

Gold had the biggest drop in more than two weeks and platinum tumbled to a six-year low on concern that resilient U.S. economic growth moves the Federal Reserve closer to raising interest rates.

U.S. household spending climbed more than forecast in August and incomes rose, government data Monday showed. The report signals the economy continues to power past a global slowdown, bolstering the case for the Fed to tighten monetary policy. Higher rates curb the appeal of precious metals, which don’t pay interest or give returns like assets such as bonds and equities.

Gold fell for a second straight session after Fed Chair Janet Yellen said Thursday that the central bank is still on track to boost its benchmark rate this year. On Monday, Fed Bank of New York President William C. Dudley echoed that view, saying the “economy is doing pretty well.” The remarks come less than two weeks after the Fed kept rates unchanged, citing the slowdown in China and other international concerns.

“Healthy spending should nudge the Fed closer to a rate hike,” Tai Wong, the director of commodity products trading at BMO Capital Markets Corp. in New York, said in an e-mail. “That won’t help gold.”

Gold futures for December delivery slipped 1.2 percent to settle at $1,131.70 an ounce at 1:57 p.m. on the Comex in New York. That’s the biggest drop since Sept. 9. The metal fell 0.7 percent on Friday.

Assets in gold-backed exchange-traded products rose 4.6 metric tons on Friday to 1,526.9 tons, the highest since Aug. 31, according to data compiled by Bloomberg as of Friday. The holdings were at a six-year low last month.

Silver futures fell on the Comex.

On the New York Mercantile Exchange, platinum futures for January delivery slumped as much as 3.3 percent to $919.80 an ounce, the lowest for a most-active contract since January 2009, after settling at $922.50. Palladium also declined.

Precious metals were hit on Monday, with silver the worst performer.

Commodities slumped on Monday after Chinese industrial companies reported profits fell the most in at least four years. The country’s stock-market plunge and currency devaluation are adding new challenges as China struggles with excess capacity, sluggish investment and weaker manufacturing.

Competition authorities in Switzerland announced an investigation into some of the world’s biggest banks, including HSBC Holdings Plc, on suspicion that they colluded to manipulate the prices of gold, silver and other precious metals. UBS Group AG, Deutsche Bank AG, Barclays Plc, Morgan Stanley, Julius Baer Group Ltd. and a unit of Tokyo-based trading company Mitsui & Co. Ltd. are also part of the probe.

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