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Singapore - Gold held declines after a three-day drop as investors weighed the prospect for higher US borrowing costs against a dimming global economic outlook before a Federal Reserve meeting this week.
Bullion for immediate delivery fell as much as 0.2% to $1 162.25 an ounce and was at $1 164.39 at 09:10, according to Bloomberg generic pricing. The metal sank to $1 159.05 on Friday, the lowest price since October 13, as the dollar jumped.
Gold investors are tracking the Fed to see when borrowing costs will start to rise for the first time since 2006, with policy makers beginning a two-day meeting in Washington on Tuesday.
While US central bankers are weighing growth, inflation and labor-market data to decide whether to tighten policy, China’s central bank cut rates last week and European Central Bank President Mario Draghi signaled that he will bolster stimulus. The dollar posted the biggest weekly gain since May last week.
“While the probability of higher US rates in October is low, the uncertainty is an overhang on the precious metals market,” Huatai Great Wall Futures said in a note on Monday. “China’s central bank’s ‘double down’ on easing has boosted the dollar, which may put pressure on precious metals.”
Bernanke’s view
The US has recently shown evidence it is “pretty strong,” Former Fed Chairman Ben Bernanke said in an interview aired Sunday on CNN, citing housing, auto sales and consumer spending.
Assessing the effect of the slowing global economy will be key to the decision on when to raise, Bernanke said. Odds of an increase this week are 6%, rising to 36% for the December meeting, according to futures bets tracked by Bloomberg.
Bullion of 99.99% purity retreated as much as 1% to $1 164.81 an ounce on the Shanghai Gold Exchange, the lowest price since October 14, and was at 238.45 yuan. Silver for immediate delivery advanced while platinum and palladium fell.
