Gold recovers from nine month low

Johannesburg - Gold pared a third weekly drop as the dollar halted a rally that sent bullion prices to a nine-month low and pushed silver into a bear market.

Bullion’s first gain in four days cut this week’s loss to 1.5%. Prices have tumbled as strong economic data and the prospect of more spending after Donald Trump’s US election win boosted bets for higher interest rates.

Investors are selling out of gold-backed funds at the fastest pace in three years.

The metal rebounded on Friday as the Bloomberg Dollar Spot Index retreated from the highest in a decade. Gold’s decline earlier today stalled at $1 171.18 an ounce, which is near a 61.8% retracement of the rally from December to July.

The Fibonacci figure is used by some traders and analysts to determine support levels.

"That for me really is the line in the sand from a technical perspective," Ole Hansen, head of commodity strategy at Saxo Bank in Hellerup, Denmark, said by phone.

"The fact that there was some buying around that level shows we’re still in a deep correction within an uptrend, rather than a complete change in direction."

Gold for immediate delivery rose 0.6% to $1 189.29 by 11:08 in London, according to Bloomberg generic pricing. It’s down 6.9% in November, heading for the biggest monthly drop since 2013.

Traders are certain that the Federal Reserve will raise rates next month, curbing the appeal of owning bullion because it doesn’t provide any yield.

Holdings in gold-backed funds have dropped 85.5 metric tonnes so far this month to 1 902 tonnes, the lowest since June, data compiled by Bloomberg show.

"After Trump won the presidential election, the market sentiment has been changing dramatically," Tetsu Emori, president of Emori Capital Management, said by phone.
 
"Gold is being pushed down by the stronger dollar and an interest-rate raise. Investors are looking to buy more risky assets rather than gold as a safe haven."

In other precious metals:

Silver rose 1.1% to $16.4691 an ounce in London, after earlier dropping to the lowest since June. Platinum fell 0.3% to $913.13 an ounce, touching the lowest since February. Palladium declined 0.5% to $729.85 an ounce.