Gold Sags Most in a Month as U.S. Confidence, Dollar Damp Demand

  • U.S. consumer confidence at highest since before recession
  • China’s gold imports from Hong Kong decline to seven-month low

Gold Prices Will Go Higher: Sprott's Rule

Gold lost the most in more than a month as a surge in U.S. consumer confidence and gains in the dollar damped demand for the metal as a store of value.

Consumer confidence rose in September to the highest since before the last recession, according to a report from the New York-based Conference Board on Tuesday. The dollar spot index climbed 0.1 percent, on pace for the biggest gain in a week.

Improving economic data bolsters the case for the Federal Reserve to raise U.S. interest rates this year, which would reduce the competitiveness of gold against interest-bearing assets. Bullion also fell as Democratic nominee Hillary Clinton saw her odds of winning the U.S. presidency rise after the debate with Republican Donald Trump. Citigroup Inc. has said a Trump win in November could spur volatility in gold.

“It’s all about the dollar again, and I think the implications are for a stronger dollar and an eventual rate hike by year-end,” George Gero, a managing director at RBC Wealth Management in New York, said in a telephone interview. “I’m watching the political effects on the markets.”

Gold futures for December delivery slid 1 percent to $1,330.40 an ounce at 1:38 p.m. on the Comex in New York, the biggest loss since Aug. 24.

Last week, the metal posted its biggest weekly gain since June after the Fed held off on raising rates at its September meeting. Traders are pricing in an almost 50 percent chance that that U.S. policy makers will increase rates by December.

A Bloomberg Politics poll had Trump and Clinton deadlocked ahead of Monday’s debate.

“Last night’s televised debate between the two main candidates was widely deemed to have been won by Democrat Hillary Clinton and saw gold lose ground,” Jonathan Butler, a precious-metals strategist at Mitsubishi Corp., said by phone from London. “The ebb and flow of political news out of the U.S. is likely to be a focal point for gold, with the uncertainty associated with a Trump presidency seen as supportive.”

  • China, the biggest gold consumer, cut bullion imports from Hong Kong in August to the lowest since January amid rising property prices and an improving economy.
  • Holdings in gold-backed exchange-traded funds increased by about 2 tons to 2,032.6 tons on Monday, data compiled by Bloomberg show.
  • Silver futures for December delivery dropped 2.2 percent to $19.165 an ounce on the Comex.
  • On the New York Mercantile Exchange, platinum fell while palladium gained.
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