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Gold Holdings Decline for Eighth Day as Fed Rate Increase Looms

Updated on
  • Bullion futures heading for worst monthly decline since May
  • Probability of interest rate increase touch near-certain level

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Investors cut holdings in gold exchange-traded products for an eighth consecutive session, the longest run in almost a year, amid speculation that the Federal Reserve will raise U.S. interest rates next month.

Assets fell 9.43 metric tons to 1,923.1 tons Monday, the lowest since July, data compiled by Bloomberg show. Gold futures swung between gains and losses on Tuesday and are heading for the biggest monthly decline since May.

The metal has slumped in the past two weeks as President-elect Donald Trump’s pledge to boost infrastructure spending bolstered the outlook for growth. Minutes of the U.S. central bank’s November policy meeting due on Wednesday are likely to confirm that officials were creeping closer to an interest-rate increase. Higher rates reduce the appeal of owning gold because it doesn’t pay interest.

“We’ve had record withdrawals from gold ETFs,” Peter Thomas, a senior vice president at Zaner Group LLC in Chicago, said in a telephone interview. “We’ve already priced in the probability of next month’s rate increase.”

Gold futures for December delivery rose 0.1 percent to settle at $1,211.20 an ounce at 1:46 p.m. on the Comex in New York. The price is still up 14 percent for the year after the best first-half performance in almost four decades.

In other precious metals:

  • Silver futures for March delivery climbed 0.7 percent to $16.735 an ounce on the Comex.
  • Platinum and palladium gained on the New York Mercantile Exchange.

— With assistance by Jesse Riseborough, and Ranjeetha Pakiam

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