Share

Gold drops to 9-month low, dollar picks up

London- Gold prices fell to a nine-month low on Thursday and other precious metals slid as the dollar rose to four-year highs against a basket of currencies and stock markets strengthened.

Platinum fell to its lowest since June last year, sliding below $1 300 an ounce, and silver and palladium also tumbled.

Spot gold hit a low of $1 206.85 an ounce, its weakest since January 2, and was down 0.5% at $1 210.30 an ounce at 12:01. US gold futures for December delivery were down $8.70 an ounce at $1 210.80.

A run of upbeat U.S. data has highlighted the diverging economic outlook for the euro zone and the United States. Expectations are growing that the Federal Reserve will begin tightening rates early next year.

The prospect of diverging monetary policy between the Fed and the European Central Bank sent the euro to a 22-month low against the dollar.

US policy and currency moves are the "one and only driver" of the gold market at present, VTB Capital analyst Andrey Kryuchenkov said.

"A stronger greenback and little or no inflation for the major economies remain the key threat to bullion's upside as we head into 2015," he said.

"Notably ... the world's largest ETF provider was still reporting ETF outflows following a pronounced plunge in its physical book last week," he added. "The physical interest in Asia remains anaemic, and we still see little chance for a sustained price rebound without any consumer buying here."

Holdings of gold exchange-traded funds, popular investment vehicles which issue securities backed by bullion, have fallen by close to a million ounces this month, their biggest monthly outflow this year, according to Reuters data.

Investors will be watching more US data due later on Thursday, including durable goods orders for August, to gauge the strength of the world's largest economy and the implications for the Federal Reserve's monetary policy and the dollar.

Physical demand subdued

Physical demand has been subdued this year after a record 2013, when prices slumped by 28%. Buying of physical gold in top market China was light on Wednesday, traders said, even ahead of the Golden Week holiday next week.

China's net gold imports from main conduit Hong Kong slid to their lowest since May 2011 in August due to adequate stocks from earlier purchases and as consumer demand remained weak, data showed on Thursday.

News of central bank purchases failed to support gold. Russia added to its gold holdings in August, while Kazakhstan raised its holdings by nearly 800 000 ounces.

Among other precious metals, spot silver was down 0.9% at $17.50 an ounce, spot platinum was down 0.7% at $1 304.50 an ounce, and spot palladium was down 1.7% at $800.25 an ounce.

Platinum earlier fell to its lowest since June 2013 at $1 295.25 an ounce, while palladium slid to its lowest since late April at $792 an ounce.

The chief executive of Russia's Norilsk Nickel said on Wednesday the company, the world's largest palladium producer, and a group of private investors were in talks to buy palladium worth up to $2bn from the country's central bank.

"With 2.4 million ounces involved, close to one-year's worth of Russian mine supply, this is a bearish development - should it materialize," UBS said in a note. "The uncertainty surrounding it alone should push palladium lower."
 
 

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.95
-0.3%
Rand - Pound
23.96
-0.3%
Rand - Euro
20.46
+0.0%
Rand - Aus dollar
12.36
-0.0%
Rand - Yen
0.13
-0.3%
Platinum
911.00
+1.6%
Palladium
1,012.02
+1.0%
Gold
2,214.22
+0.9%
Silver
24.75
+0.4%
Brent Crude
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.9%
Resource 10
57,251
+2.9%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders