Gold Set to Close Below 50-Day Average for First Time Since July

Updated on
  • Dollar strengthened as Treasury yields rose, hurting gold
  • Traders wager a 73% probability Fed will hike by December

Three Charts Show How Gold Hit $1,300

Gold is set to close below the 50-day moving average for the first time since July amid increasing expectations that the Federal Reserve will boost U.S. interest rates by year-end.

Bullion extended losses after a report Wednesday showed U.S. durable goods increased more than forecast in August. An index of 15 gold-mining companies tracked by Bloomberg headed for a second straight loss, led by Sibanye-Stillwater and Randgold Resources Ltd. The metal is down more than 5 percent from a one-year high in early September.

The 50-day moving average has been a support in recent weeks, with prices bouncing off it five times since July. A close below the 50-day average would be considered a bearish sign by traders who study charts. When gold fell below that level in June, prices dropped 3.8 percent in three weeks.

Prices slipped 0.8 percent to $1,284.24 an ounce at 3:44 p.m. in New York, extending a slide below the $1,300 level breached late last week. Gold futures for December delivery fell 1.1 percent to settle at $1,287.80 at 1:43 p.m. on the Comex in New York, closing below the 50-day moving average.

The Bloomberg Dollar Spot Index climbed to the highest since mid-August, supported by higher Treasury yields.

Federal Reserve Chair Janet Yellen said Tuesday that gradually raising interest rates is the most appropriate policy approach amid higher uncertainty about inflation, reinforcing the U.S. central bank’s forecast for another hike this year. The chances for a rate increase at the Fed’s December meeting rose to 73 percent, from 63 percent the day before Yellen’s speech.

“Recent hawkishness will continue to strengthen the U.S. dollar and put pressure on gold,” Zhou Shiwei, analyst at Phillip Futures in Singapore, said by email.

China Demand

  • Chinese gold jewelry demand fell 3.6 percent from a year earlier, according to research firm Metals Focus. Consumers are opting for items of lower purity, rather than gold of 99.99% purity. Gem-set, 18 carat products are gaining market share, analysts including Junlu Liang said in a report.
  • “China has been importing noticeably more silver for several months now,” analysts at Commerzbank AG including Eugen Weinberg said in a note.

Other precious metals:

  • Spot silver and platinum fell, while palladium advanced.
  • Palladium prices topped platinum for the first time since 2001

— With assistance by Ranjeetha Pakiam

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